Kelton Corcoran is a senior content marketing specialist at NaviPlan, the financial planning technology provider of choice for more than 140,000 financial professionals.
As the financial planning world continues to become more and more focused on digital client experiences, the core reason behind these innovations can sometimes be lost in the shuffle.
Do not get me wrong – tools that give advisors more capability and convenient avenues to communicate with their clients are absolutely crucial, but there is little value in having the latest and greatest technology if it is just to check a box. Instead, advisors need to remember that the ultimate goal of technology should be to improve the connection their clients have with their finances and the strength of the client-advisor relationship.
The importance of that last part – relationship – can be tough to quantify but is essential to remember when selecting new technology. Thankfully, market research has shown just how important relationships are to clients, especially to those in the high-net-worth (HNW) segment. Drawing from the recent 2018 Capgemini World Wealth Report, here’s a look at the importance of relationships – and why they should be a priority for advisory firms in their technology search.
The researching is compelling
First off, the opportunity in the HNW space continues to be lucrative. From 2016 to 2017 alone, the total number of HNW individuals in North America increased by 9.9 percent. This marks the sixth consecutive year of growth for the HNW segment and Capgemini projects nearly 40 percent additional growth through 2025. Bottom line: the already attractive HNW market is going to keep getting even better.
While this is promising, perhaps the most compelling finding is the data around client behavior and satisfaction. There are three statistics that really stand out:
1. Satisfaction rates do not increase proportionally to investment return rates
2. Only 55.5 percent of HNW clients said they feel very well connected with their wealth managers
3. The number of firms per HNW client decreased from 2.6 to 2.2
From 2016 to 2017 in the U.S., average investment performance for HNW clients increased by nearly 30 percent, yet the satisfaction rating clients had for their wealth advisors increased by only 9 percent. During the same time frame in Canada, the narrative is even more intriguing: investment performance increased by 24 percent, yet wealth advisor satisfaction ratings actually declined by a few percentage points.
With that in mind, it comes as no surprise that only about half of HNW clients feel very well connected with their wealth manager. Despite positive performance in their portfolios and an improved financial outlook, clients still crave a strong connection in the client-advisor relationship.
So, why does this preference for strong relationships matter? Because HNW clients are reducing the number of firms, and advisors, they work with. When clients develop a strong relationship with an advisor, they are more likely to consolidate their needs down to the source they trust most. Advisors who can truly connect with HNW clients have a huge advantage over those who merely focus on performance and will continue to separate themselves from the pack as the HNW market grows larger.
What Advisory Firms Can Do About It
When setting out on a search for new technology to improve how your firm creates and delivers advice, consider how each new tool will improve the relationship between you and your clients. Innovations such as the NaviPlan® client portal, Presentation Module, and Client Report Editor are being driven by client demand and were born out of a desire for clients to feel more connected with their finances and their wealth manager.
These tools enable advisors to provide truly holistic financial advice that is accessible, interactive, and highly relevant. Once you determine a set of tools that will help your firm, be sure to create a game plan for implementing the technology. Think about how you will introduce the new capabilities to your clients and how the additions may elevate your firm's value proposition and marketing messages.
To learn more about how these tools can transform your client relationships and help grow your business, contact us here.