With increased competition and commoditisation in the market place, wealth managers are seeing growing levels of churn with challenging implications for profitability.


A recent study of high net worth individuals by KPMG highlighted that 45% were more ready to switch providers than 5 years ago and 41% have considered splitting their portfolio.

Traditionally, firms would have looked to increase margins to compensate for asset lost but with price sensitivity already stretched to the limit, this is no longer viable.  Customer retention remains crucial.

However, we’re operating in an environment of economic turmoil, where regulation is king, clients are demanding the highest levels of service and budgets have already been cut (and cut again).  This means traditional methods of attracting and retaining asset need to be challenged.

This is exacerbated further by the transfer of wealth to a younger generation, creating a new segment of internet savvy investors.  Spectrem Group report that young millionaires, those aged 44 and under, are three times more likely to be influenced by websites providing detailed information online.

If wealth managers are to successfully retain their clients, they are going to need to be creative.

Could customer engagement be the answer?

Customer engagement is a broad concept.  Indeed a technical definition for customer engagement is still being debated by the academics.  But to the man on the street it’s about getting people to connect with your brand for rational and/or emotional reasons.  Once they’re ‘connected’, the theory is they’ll buy more, stay with you longer and be more profitable.

For firms that can successfully engage their customers, the reward can be significant.

A recent report from Gallup Consulting reveals that customers who are fully engaged contribute 23% more than the average customer in terms of share of wallet, profitability, revenue and relationship growth.  An opportunity not to be missed.

Source:  Gallop Consulting “Customer Engagement Ratios”

What does this mean in the virtual world? 

It’s the same on line.  But different.  You can’t make eye contact with your clients.  You can’t chat about the weather or shared interests.  Nevertheless, customer engagement is just as important.  In fact, engaging your clients online should be your top priority; increasing the frequency they return to your site, their tendency to tell their colleagues about you and the probability of them sticking with you.

This is reinforced again by Gallop Consulting’s study:  “Extremely satisfied website users are seven times more likely to be engaged as less satisfied website users.”

Engaging investors online: A starter for 10

So how can you engage your clients?  It’s not easy.

Web users no longer want to simply browse static site content or e-newsletters.  They won’t tolerate overly complicated, slow or boring websites.  They don’t want to enter the same information repeatedly.  And any concerns over data security will be a complete turn off.

Instead they want fresh, targeted, valuable and concise content; think blogs and fund manager commentaries.  They want to be able to participate and interact.  They want independent endorsements.  Historically, one of the most influential factors in our buying decisions has been the opinions of our friends and family.  Likewise, a large majority of online investors might trust what other clients say about the products they buy more than the providers themselves.   This is because we have a tendency to  trust people who are “on our side,” even if we don’t know them personally.

The list goes on… Investors want (in fact expect) instant access to their account information and the ability to transact, 24 hours a day, 7 days a week.  They want websites that are simple, easy to navigate and user friendly.  And they need to be secure.  They want to be in control (but be able to find help when they need it).  They want email access to an advisor and digital tools to research products themselves.  And, to top it all off, they want personalisation and customisation; online reporting tools and rewards for loyalty.

At Kurtosys, digital tools and client reporting are what we do.  We’re convinced that digital tools can create wow factors that investors will stay for and drive a deeper level of engagement that will significantly enhance asset retention.  But it’s not us that need to be persuaded…

Measuring success

The problem with online engagement is that it can be difficult to quantify.  In the next post we’ll take a look at how you’ll know if your customers are engaged and how you can help stakeholders understand that customer engagement will engender loyalty which, in turn, can enhance the bottom line.