Your IndustryNov 10 2015

Advisers must digitally adapt to keep clients: Pershing

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Advisers must digitally adapt to keep clients: Pershing

Individuals are willing to pay for high-quality digital communications, according to research from Pershing, which warned advisers and wealth managers who fail to meet these desired digital capabilities run the risk of losing clients.

The BNY Mellon company surveyed 1,002 mass affluent and high net worth UK individuals in June, finding most want advice that caters for specific life events rather than general financial planning.

The most popular reasons are a career move or location change (13 per cent of respondents), followed by marriage (9 per cent), retirement (8 per cent) or financing a property (8 per cent).

Most of the key life events that prompt individuals to seek advice take place between the ages of 38 and 50 with those aged 40 and under experiencing twice as many high-value life events than the older client groups.

The research also suggested loyalty to existing financial providers is far from guaranteed.

In the case of a life event such as retirement, the research found that 8 per cent of respondents sought a new adviser relationship.

In addition, younger generations are even more open to potential change, with 55 per cent of investors under the age of 35 having switched financial providers in the last two years.

Though more likely to change, younger wealthy individuals particularly value the support of their provider in navigating major changes with the right advice, products, services and digital tools.

They expect high-quality online services and adviser interaction.

Thirty-nine per cent of respondents under 35 years of age said their main interaction with providers is through a named adviser who gives advice, compared to just 21 per cent of those over the age of 65, who mainly use a named adviser.

Ileana Sodani, chief relationship officer at Pershing, said to keep clients for the long term, advisers must maintain engagement throughout the entire lifecycle and take steps to renew relationships.

“Wealth managers need to recognise and deliver what younger clients expect of them or risk missing out. This of course is while continuing to focus and grow their traditional client base; the challenge for the future is to be more targeted for different demographic groups.”

Pershing stated with the rise of ‘robo-advisers’ and execution-only online services, there is a danger providers that do not respond to technology demands will see their clients go-it-alone.

Seventy-five per cent of respondents would consider leaving their current financial provider if they were unable to easily transfer money online, with 69 per cent saying that a lack of online access to their portfolio would prompt them to search for a new relationship.

Forty-two per cent of younger wealthy individuals would pay more for good quality digital communication, compared with just 1 per cent of investors over the age of 65.

Among respondents under the age of 35, reputation is the most important factor when selecting a provider, chosen by 30 per cent, yet search engines came a close second with 25 per cent.

Ms Sodani added that this digital challenge is not as simple as building a website; advisers must really understand their client base.

“Even the most tech savvy clients still want face-to-face advice when it matters most, and not everyone wants to transact online. To retain and grow relationships providers must provide flexible means to communicate and manage finances.”

The survey found that 76 per cent of wealthy clients now conduct their financial affairs fully or mostly online, with only 10 per cent claiming never to use online wealth management tools.

peter.walker@ft.com