Wealth managers commonly position themselves as having high service standards. According to current research, that claim may be more aspirational than actually true. What the research reveals is that despite claims of maintaining the highest standards of personal service, over half of wealth managers believe that the industry’s service quality trails far behind other HNW service providers. Comparing the usual way that wealth management is delivered against the common practices among other types of service providers serving this same demographic, this research suggests that wealth managers are actually somewhat inconsistent.
We think this is primarily due to the divided mind advisors have about what the fundamental value proposition is that they bring to clients. When securities markets are strong, leading to consistently positive absolute returns, advisors tend focus more on the investment returns themselves (alpha) as their primary value. When market prices are weak, they tend to refocus their value proposition to the personalization of portfolio composition and their personal knowledge of the nuances of a client’s risk tolerance.
While this an easily understandable reaction to client hopes and fears, we think that it is a mistake. We believe, and industry research supports, that advisors need to learn from the successful luxury brands and related non-financial HNW service providers: know what your true value is and develop it to best practice standards of excellence. Which, by definition, means that it will not shift with the winds of market conditions.
Once an advisor has settled on how they want to position their firm with clients, it is critical that all the firm’s communications deliver and support that message. The most important place that this is reflected is in the firm’s client reporting. Type and structure of client reporting is the most concrete representation of what an advisor’s value proposition really is: For wealth management, reports offering more general asset context and forward projections; while for a more Alpha derived positioning, reports more granular performance analysis.
In the past advisors could only do this customized client reporting with their paper reports. Web-reporting has be constrained with “one-size-fits-all” because of the cost and complexity of programming screen design. With the flexibility of screen customization now being offer by companies like InvestCloud this in no longer true. Now a firm’s data-reporting web screens can be as customized as any paper report. What’s more it is so easy and cost-effective that an advisor can tailor reports not only for different strategies and products, but also for different client groups.
This revolution in report customization is going to open avenues for progressive advisors to differentiate themselves in ways never before possible. It will allow even smaller advisors a cost effective way to offer their clients a highly custom reporting experience. For larger advisors it will allow tailored reporting for different product types and strategies. For any independent firm, it will give them more competitive leverage against the global banks and wirehouses with which they compete.
Currently a principal with InvestCloud’s design group, Jonathan Bentley was formerly founder and CEO of Light[Port] prior to its acquisition by InvestCloud in early 2013. Bentley has nearly 35 years industry experience having been a successful broker and a fee-based advisor before founding Light[Port] in 1997. Over the last 15 years he has overseen the completion of over 1000 web projects including several hundred larger marketing and client reporting portals. For more information visit www.investcloud.com
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Advising Affluent Americans (Whitepaper)
Strategic Website Design for Advisors (Blog post by Jonathan Bentley, Executive Vice President, InvestCloud)
The Data Automation Imperative (Whitepaper)