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Wealth managers must combine value and values to attract wealthy clients

The world's up-and-coming wealthy are most attracted to wealth managers who can demonstrate a blend of values and value, says a study by SEI, Scorpio Partnership, and NPG Wealth Management.

The study, titled "The Futurewealth Report 2014: The quest for a valued relationship," surveyed 3,025 respondents globally with an average USD2.9m in net worth.
 
When asked to select the important attributes for picking a wealth manager, the firm's reputation for quality of products and services (74 per cent) was the most frequently chosen response, closely followed by the costs associated with the products and services (64 per cent).
 
The results indicate that a wealth manager's character and fees are critical factors in the minds of the Futurewealthy when evaluating potential relationships.
 
"We are committed to developing new ways to enhance the customer experience. To that end, we wanted to delve deeper into clients' motivation and learn about what drives them as customers," says Alfred P West, Jr, chairman and chief executive officer of SEI. "Through these studies we have not only gained unique insight into the psyche of the Futurewealthy, but have analysed the elements they value in their relationships with wealth advisors. We hope this research helps wealth management organisations identify areas where they need to improve and provides them with a roadmap to do so."
 
The study reveals that individuals on the fast track to wealth pursue various avenues of introduction with and investigation of potential wealth managers. More than a fifth (22 per cent) seek out the advice of friends or family before making a selection, while 15 per cent of respondents conduct their own research of the advisor market. The results also pointed to changing circumstances as a significant driver for why the Futurewealthy sought new wealth management relationships. When asked about the circumstances that led them to search, the top responses were the desire to diversify assets (30 per cent), followed by the purchase of a home (21 per cent), and promotion or change in career (20 per cent).
 
"What we're seeing from investors and what the study's findings support is that the process for selecting a wealth manager is not a random one, but rather an inquisitive, investigative, and exhaustive search for the best partner," says Ryan Hicke, senior vice president, SEI Wealth Platform. "As client requirements evolve, the need for managers to collect and manage client data and turn it into meaningful information becomes paramount to ensure the consistency of the overall client experience for every individual. Moving forward, wealth managers must leverage technology, particularly its ability to interpret customer insight, to their advantage in delivering that client experience."
 
According to the results, the Futurewealthy work with multiple providers for advice regarding their personal investments. While they typically work with three or four firms, the Futurewealthy on average entrust half of their investable wealth (51 per cent) to a primary advisor. But, at the same time, less than a third of the Futurewealthy (31 per cent) believe their primary wealth advisor has a solid understanding of their total financial picture.
 
"This study shows that the Futurewealthy are constantly searching for a more valued relationship and are open to the idea of switching primary advisors in order to attain it," said Kevin Crowe, head of solutions, SEI Advisor Network. "That creates a strong opportunity for advisors to foster a personal connection with these wealthy individuals by getting to know them and their entire financial picture. Advisors who understand what it takes to capture the attention of the Futurewealthy are the ones who will successfully attract and engage long-lasting relationships."
 
While reputation and cost were the top factors in choosing a wealth manager, performance (17 per cent) was the top factor for the Futurewealthy in deciding to stay with their primary wealth advisor. Having the solutions and services to meet their needs was a close second (15 per cent), followed by being happy with the advice provided (13 per cent). Even though performance topped the list, the results reveal it is only one of many important factors influencing Futurewealthy to remain with an advisor.

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