With rapidly emerging technology and uncertain markets in the mix, wealth management firms have more opportunities (and pitfalls) to navigate than ever before. But don’t get overwhelmed by complicated strategies and tactics — the fundamental keys to success are time-tested and simple. Here are three characteristics that top wealth management firms have in common.
They Embrace Technology
The fintech/wealthtech is exploding, thanks in no small part to the COVID-19 pandemic. In 2021, investments in fintech companies hit a record-setting $91.5 billion, nearly doubling what they fetched in 2020. And as pandemic-related distancing continues, more investors are handling their financial dealings in a digital space, doing away with the need for physical paperwork or brick-and-mortar meetings with clients. Clients are becoming more comfortable using technology in a financial setting to interact with their advisors and manage their accounts.
Firms that can meet their clients’ appetites for a more streamlined digital experience enjoy huge benefits: when compared to their peers, wealth management firms who embrace technology have higher revenue, stronger organic growth, and greater compounded annual growth rates. Top-tier firms understand that building a robust technology infrastructure is essential for future growth, and they invest their resources accordingly.
They Prioritize Client Relationships
At the core of every successful wealth management firm is a deep portfolio of carefully nurtured client relationships. And for good reason: it costs more to attract and onboard new clients than it does to retain existing ones. Thus, top firms make it a priority to keep their existing client base satisfied. Despite market volatility and unprecedented global health challenges, client retention in wealth management hit an all-time high in 2020, at 94.6% compared to 94.4% in 2019.
How do they do it? By giving clients what they want: personal attention. A survey of UHNW individuals who switched advisors cited advisors not returning phone calls and emails in a timely manner and advisors not reaching out to them proactively as two of their primary reasons for seeking services elsewhere. Investors clearly want their advisors to make time for them and to have deep enough knowledge of their goals to initiate contact at appropriate moments.
And firms who truly value clients find ways to give their advisors more time to connect with them. Investing in emerging technology to eliminate cumbersome paperwork and repetitive processes allows advisors more bandwidth to develop the essential relationships that power the firm.
They Keep an Eye to the Future
Millennials and Gen Xers stand to inherit an estimated $30 to $68 trillion over the next few decades from Baby Boomers and the Silent Generation, an event that will collectively make up the largest transfer of wealth in history. Obviously, that makes building relationships with the children and grandchildren of older clients of tantamount importance to advisors, who can offer a continuity of stewardship to new heirs.
That said, younger generations also have higher expectations of their service providers, particularly where technology and customer experience are concerned. Upcoming digital natives will change how advisors manage their funds and demand digital services and solutions. Savvy wealth management firms recognize the importance of investing in leading-edge technology to meet the needs of their clients and are recruiting an upcoming generation of tech-fluent advisors to assist them. With 43% of current advisors over 55 years old and, presumably, eyeing retirement in the next decade or two, top firms cultivate a pipeline of young professionals to maintain their current standard of service.
Top wealth management firms are fundamentally future-oriented and focused on emerging tech, long-term client relationships, and the rising generation of investors and advisors. Strength in these three areas sets up RIAs for success tomorrow and beyond.
Ryan George is the Chief Marketing Officer at Docupace. He is responsible for the company’s brand awareness, early-stage sales pipeline, content strategies, customer and industry insights, internal and external communications, design, and events. George actively engages in leadership roles in both the financial services and marketing communications communities. He a member of the Forbes Communications Council, an invitation-only, fee-based organization of senior-level communications and public relations executives, the CMO Council and the CMO Club.
