Much has been written about the significant changes in the wealth management industry driven by digital innovation. Digital tools that enable financial advisors to do more in less time for clients — while also giving clients a more convenient and personalized wealth management experience — are indeed essential for helping advisory practices grow and remain competitive.
However, while cutting-edge technology can improve and streamline many aspects of financial planning and wealth management, even the fanciest features and most sophisticated capabilities can’t replicate a close advisor/client relationship based on trust and understanding. These relationships are important to clients, especially for those with high net worth.
Without a solid foundation at the heart of their relationships with advisors, high-net-worth clients will leave — even if their advisors are using the latest technology to improve investment outcomes. Capgemini’s World Wealth Report 2018 found that, among HNW investors, satisfaction with advisors and investment returns do not necessarily grow together proportionally.
Globally, HNW investors garnered investment returns of above 20% in 2016 and 2017. However, for every 1.0% of investment performance delivered during the two-year period between Q1 2016 and Q1 2018, HNW investors’ satisfaction with advisors only increased by 0.1% to 0.4%.
Capgemini’s research demonstrates that higher investment outcomes aren’t enough for advisors to increase satisfaction and retention among their HNW clients. In fact, despite two consecutive years of investment returns above 20%, wealth management firm retention among the HNW client segment is decreasing.
As of Q1 2018, HNW clients engaged the services of 2.2 wealth management firms, on average—down from 2.6 in 2014, according to Capgemini.