Singapore-based Wilson told our sister publication Fund Selector Asia that strong investment returns do not fully correlate with the satisfaction of high net worth clients in Asia.
The firm’s research team used the industry’s general “passing grade” of a 70% of satisfaction level as the benchmark and none of the Asian countries or regions passed the 70% threshold. The average satisfaction level is 62.4% across Asia (ex-Japan), up slightly from 57% year-on-year.
[The question asked: “How satisfied are you with your primary wealth manager (the individual who manages your wealth) and your primary wealth management firm?”]
“The satisfaction level is picking up slightly over time but that increase is very vulnerable to a bad year in the market after so many good years recently.”
A bad year would be expected to make the satisfaction level fall significantly, he said.
He noted there are four areas in which the industry is failing to build and sustain a higher level of satisfaction from their high net worth clients. They are: fee transparency, a customised investment experience, an overall value proposition and a personal connection when it comes to client communication.
Getting personal
Investment is a personal experience, Wilson said, yet private bank wealth managers are falling short. Generally, they do not even provide the customised, personal experience that, say, Google, Netflix, Apple or Amazon are providing to users.
On value proposition, he said HNWIs in Asia usually do not differentiate wealth managers based on investment performance.
“The HNWIs are intelligent and they understand that ‘rising tides lift all boats’. In a year of great returns, they question why they are paying wealth managers when they can probably get returns everywhere,” he added.
On top of investment returns, high net worth individuals in the region seek additional services, such as wealth transfer, advice on philanthropy and sophisticated financial planning — steps beyond merely buying and selling products.
Moreover, in Asia, the level of personal bond between HNWIs and their relationship managers remains low. “The connection is not necessarily weak or negative. It is not about whether they get along or have friction, but because there are mostly functional connections in this human trust-based industry.”
Additionally, he suggested private banks should reorganise people within the firm to service their clients better based on some sharing of interests. The situation of mismatching happens more in the affluent banking segment (investors with a net worth of $1m (£750,000, €870,000) to $5m), where he sees a far lower relationship manager-to-client ratio.
In terms of digital communication, he believes there is improvement to be made. “Client-facing private bankers should make the message more relevant to the client, instead of a mass mail that is obviously sent to everybody. It is the opposite of intimacy with clients.”
Relationship between investment return and satisfaction in Asia over 12 months
| Inverse
Satisfaction levels declined or remained flat |
Singapore |
| Muted
Slight changes in satisfaction |
China, Malaysia, India |
| Positive
Increased satisfaction levels |
Hong Kong |
Source: Capgemini. Results are based on a survey for the period of April 1, 2017 to end March 2018, when markets delivered relatively high returns.
Tech tools
Wealth management firms have used technology for decades, but mainly for back-office support instead of customer experience, Wilson said.
He believes more large-scale wealth management firms will catch up on the usage of client-facing digital tools in order to improve customer experience.
“There is an overwhelming consensus from wealth management firms in Asia that technology is important,” he said.
Rather than technology replacing the human side, he believes there will be hybrid advice, which blends human services and automation.
“It is not a zero-sum game but how the firm puts two elements together. How much digital tool participation as well as human resources are needed depends on each client case.
“At the beginning of the relationship, we still need people to develop the relationship and profile a client’s life goal.”
Once an individual plan is laid out, evaluation and optimisation can largely rely on automation. Only urgent matters to resolve or key decisions to be made will require wealth manager participation.
He noted that it also means that the role of relationship manager will change significantly. RMs will no longer be required to have deep investment expertise because most investment ideas will come from the firm’s in-house views. A more important responsibility will be mastering the automated part of the service and using it effectively in the client’s interest.
