Client expectations are changing and wealth management firms around the world need to change with them if those organizations expect to retain their business relationships and assets, according to the PriceWaterhouseCoopers’ (PwC) 2013 Global Wealth Management Survey released on Wednesday.
“Clients have fundamentally been changed by the experiences that they’ve been through with the global financial crisis, scandals and they’re much more technologically enabled,” said Steven Crosby, senior managing director, Americas Wealth Leader, PwC, in New York. “They’re more willing to use a sort of a hybrid self-service model, they do a lot of things on their own, and look at their trusted advisor for that kind of consultant advice/guidance about what they should do at certain life stages [or with] different assets. “
According to the report, many wealth management firms around the world, and particularly in Canada, recognize that they need to offer more services but are struggling to implement changes, according to Petrina Dolby, senior advisors of PwC’s Canadian wealth management consulting practice in Toronto, particularly in the area of estate planning, tax planning and intergenerational transfer.
“Those are some of the issues that are top of clients’ minds,” said Dolby. “Those are some of the areas where some of the Canadian institutions need to look to see how they can address that either internally or through relationships with third-parties.”
Failing to meet the needs of clients transferring wealth from one spouse or generation to another can be harmful to wealth management firms. According to the study, only 71% of assets were retained by firms in 2013 when wealth was transferred between spouses down from 75% to 100% in 2011. That ratio drops to 51% when wealth is transferred to children.
For most firms, the key is to build relationships with the client’s spouse, children or even the charity boards that the individual gives to, said Crosby. “It’s amazing how many business relationships just stop at the one relationship,” he said, “and they don’t try to build it down stream.”
Traditionally that one relationship has been with men but wealth management firms may want to pay more attention to women to make sure they retain client assets. Women tend to be more connected with their children and other family members than men, said Dolby, and so building a relationship with women makes it easier for wealth management firms to cement a relationship with the next generation.
Dolby points out that Canadian firms do have strategies to foster relationships with more people but that to really make a difference those organizations must move beyond word to action.
“We see plans in place and evidence, at least in Canada of that starting,” she said, “but [wealth management firms] need to go back and really understand the specific needs of that client.”