The world has changed since 2008 and private wealth advisors are now faced with volatile global markets, new government regulations and growing competition. Add to this the fact that the Madoff scandal and other schemes exposed in the financial crash have many high-net-worth investors wanting to play a greater role in the management of their investments. Such a new world brings both challenges and opportunities.
There is a compelling link between the amount of attention given to clients and business growth. When you combine this with the fact that a significant percentage of new clients comes from referrals-87%, according to some estimates-it becomes clear that forging a stronger relationship with your clients is well worth the time, energy and resources. The challenge is to do this at a time when operational costs are mounting and profits are shrinking.
Top private wealth firms maintain a balance between these opportunities and challenges by streamlining their technology systems and processes. They leverage the most innovative solutions on the market and rely on a broad range of capabilities that allow them to give significant focus to the client.
Strengthening Client Relationships
Successful private wealth advisors spend at least 40% of their time on client-facing activities, learning the client's concerns, goals and expectations, and in the process identifying issues the client is unable to articulate, such as estate planning and its impact on the next generation. Private wealth advisors who can identify, anticipate and fulfill the needs of their clients-and become a more integral part of their financial lives-stand to generate more referrals.
Global issues, market swings and legislative or taxation changes offer you an opportunity to connect with your clients and provide insight, clarification and commentary. Clients will come to depend on your expert knowledge and experience.
Here's a checklist of meaningful ways you can add value to the client relationship:
Provide insight on breaking news, such as the European debt crisis, and how it may or may not affect your client's global investments.
Confirm actions and activities related to your client's holdings.
Provide insight to enable your clients to better understand their portfolio's performance.
Communicate, educate and reinforce the expertise and services you provide.
Interpret trends and issues related to the market and the industry as a whole.
Meet with clients to discuss their preferences regarding reporting, alerts and notifications.
Removing Growth Barriers
As much as private wealth advisors may want to spend time with their clients, the reality is that they must focus an inordinate amount of energy on simply running the business, battling inefficiencies and putting out fires. The more time you spend on back-office duties, and the less time you spend with clients, the more you compromise your practice's sustainability and long-term growth.
Symptoms of inefficiency include:
Data is unavailable on demand and/or inaccurate.
Clients don't have access to investment information and must call in on a regular basis.
Inconsistent client reporting.
Slow response to client questions and concerns.
40% or more of advisor time is not spent with clients.
Stagnant or shrinking sales or referral pipeline.
The average private wealth practice operates several "secondary businesses" that drain valuable resources and detract from the client relationship. The good news is that there has been a surge in technological innovation that has allowed private wealth advisors to do more with less and keep pace with the demands of high-net-worth clients.
Solution providers-such as specialists in data aggregation and reporting-can deliver customized systems, services and powerful new capabilities. Because data aggregation and reporting solutions comprise their core business, they are committed to investing time, money and human capital towards ensuring the latest technologies and highest quality. Specialists load and reconcile data to custodian positions, track transactions and monitor statements. Other advantages include:
Access to thousands of custodians through proprietary data feeds.
Integration with providers of data, benchmarks and pricing.
Optical character recognition (OCR), which accurately converts paper-based statements into electronic files.
Investment account monitoring software to track the status of account updates.
Certified, fully-secure data centers with business continuity and disaster recovery safeguards.
Advanced systems engineering to seamlessly integrate aggregation, reporting, MIS, CRM, workflow and document management capabilities.
Redundant systems and processes to ensure no single point of failure.
With access to these kinds of solutions, private wealth advisors are freed to focus on retaining and adding clients. A foundation of high-quality data and reporting allows private wealth advisors to look for opportunities where they can be proactive and strive to take the lead role. It also enables evaluation and communication of a client's total wealth picture, enabling a greater level of risk mitigation.
An end-to-end solution on a single platform, with features such as electronic forms, workflow monitoring, and collaborative calendar and planning tools, allows private wealth advisors to deliver the critical information they need to strengthen their client relationships and differentiate themselves from the competition.
To deliver an exceptional client experience, private wealth advisors must offer clean data aggregation and premium reporting. Applying greater efficiency overall translates into greater value through better investment risk management, consistent returns and greater investor transparency. By outsourcing these capabilities to qualified specialists, you can bring these powerful offerings together under your firm's brand.
Specialists offering a comprehensive platform can provide efficiency and scalability without further burdening your practice's infrastructure. At the same time, they allow you to maintain complete control over how your firm operates and interacts with clients, especially when the capabilities they deliver integrate seamlessly with other systems.
Some key data-driven capabilities to look for:
Management Information System (MIS) - The ability to access and centralize information that is relevant to clients, such as news that affects their investments or the status of actionable items.
Intelligent Dashboards - Drilling down into information to analyze how it affects a client's financial picture, allowing you to assess risk and reach out to clients with appropriate solutions.
Document Management - Securing access to wills, trusts, legal and accounting records, passports and other vital documents, as well as quickly accessing information using tags or intuitive searches.
Workflow Management - Improving workflow monitoring and management with tools that provide efficient collaboration and planning, resulting in better teamwork, stronger client relationships and proper oversight.
Client Web Portal And Mobile Accessibility - On-demand access to investment information at any time and from any online device.
Risk Mitigation- Simplifying the governance, risk management and compliance associated with sensitive client data, with solutions that can transform complicated processes into highly secure, collaborative frameworks.
Client Billing - Lowering costs and reducing error with one integrated billing system that works with the touch of a button.
Portfolio Management - Ensuring portfolio risks and returns remain consistent over time with tools that provide insight into asset allocation for single or multiple accounts, groups of accounts, and individual positions, with rebalancing capabilities.
CRM Integration - Managing contact information, notes, events and opportunities, as well as financial reports, in a form that can be easily referenced in conversation or e-mail when a client has questions.
Being a successful private wealth advisor to high-net-worth clients in this new financial climate depends heavily on your ability to create a more efficient and cost-effective practice. The best business model frees up time by leveraging all the resources, technologies and capabilities through a specialist solutions provider. As your clients' satisfaction level rises, and referrals increase, your business will begin to experience growth and realize greater profitability.
Robert Fiore is the president and CEO of Private Client Resources (www.pcrinsight.com), an aggregation, reconciliation, reporting and service partner to private banks, large RIAs and family offices.