World Wealth Report 2009

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World Wealth Report Spotlight

Thought Leadership
Optimizing Client-Advisor-Firm Dynamics is Key as Wealth Management Firms Tackle Crisis Fallout

Excerpt from the World Wealth Report 2009.

PDF - 1.2 MB

 

The global economic and market downturn has shaken the trust and confidence that high net worth individuals (HNWIs) placed in markets, regulators, financial institutions, and the very principles of portfolio management, according to the 2009 World Wealth Report. Market losses and diminished confidence forced many HNWIs to shift their wealth towards safer investments and across multiple institutions as a means of reducing risk.

The Spotlight shows more than 25% of HNWIs withdrawing assets or leaving their wealth management firm altogether in 2008. This demonstrates the heightened need for firms to reassure clients and focus on both increased transparency and simplicity to mitigate any gaps in understanding between clients, advisors and firms.

In this environment, advisors and wealth management firms will need to pursue more open and transparent client communications, provide enhanced information on risk factors, and increase levels of client service to stem attrition and create stronger retention. The Spotlight identifies a set of strategic levers which can directly impact the rebuilding of client trust and drive profitable growth, shown in the diagram below.

Findings show that service quality, portfolio performance and investment advice are the most important client retention drivers while lost of trust and confidence in firms and advisors are the biggest reasons for client attrition. Statement and reporting quality, online access and capabilities, risk management and due diligence capabilities, desired product options and fee structures are the key gaps where wealth management firms and advisors should focus for driving increased client retention going forward.

The World Wealth Report is based on statistically significant samples obtained through surveys of more than 1,350 advisors, more than 200 high net worth clients and more than 60 senior executives at wealth management firms.