Why a USP is becoming vital for wealth managers

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Michael Butler, ECI

Michael Butler, partner at ECI, talks to Harriet O’Brien about the value of developing a unique selling proposition

 

You’re a firm advocate for wealth management companies developing a USP why is this now increasingly important?

 

The market is increasingly competitive, both in terms of winning new customers but also in terms of acquisition opportunities. A USP will help define who your target market is and give you right to win.

 

Consolidators have spent a lot of time sharpening their proposition to potential targets, but there are also several businesses in the wealth management sector that are delivering fantastic growth because they can offer existing and prospective clients a compelling USP. In general, this is focused on targeting distinctive segments that need a unique wrap around to the wealth management offer, such as tackling different regulatory or tax needs. Some examples of this might be those that offer wealth management to expats, those in a partnership model, retirees, or lottery winners – it is all about being able to offer a bespoke service targeted to customers’ unique needs. This USP, whatever it may be, will become increasingly important amid growing competition in the sector, both for end customers and for acquisition opportunities.

 

 

 

Run us through the distinctions between wealth management companies and traditional financial advisors and how a unique relationship can be built between them.

 

Some financial advisers will use the title “wealth manager” and “financial adviser” interchangeably, but, by definition, wealth managers deliver a holistic approach when it comes to financial planning. While a financial advisor might only offer investment advice, a professional wealth management company provides a comprehensive service that considers all aspects of a client’s financial circumstances, including investment management, financial planning, tax services, retirement planning, legal planning, and estate planning, among others.

 

There are approximately 5,540 financial advisers in the UK, and many want support with the increasing regulation compliance and administration so that they can focus more time on assisting their clients. On top of this, the age profile within the sector has increased steadily in recent years, so many are looking for succession solutions, with consolidation with a wealth management company offering an effective option.

 

Retaining advisors is the best way for wealth managers to retain clients – what’s the most effective way to do that?

 

Wealth managers that can successfully retain their best advisors will have an advantage in the market, as advisors own the client relationship. Therefore, it is imperative for wealth managers to offer advisors a great place to work.

 

Wealth managers that are successfully doing this often have high-quality training on offer, with an ability to take care of back-office administration, freeing up advisors to spend more time with existing and prospective clients. Make sure you take the time to understand the expectations of all parties before a transaction and that you’re sure the cultural alignment is there.

 

The wealth management sector has been experiencing considerable market activity in recent years, particularly with highly competitive mergers and acquisitions. What advice can you give over different acquisition models, and how important is distinctive company culture in attracting a seller?

 

There are multiple companies in the wealth management sector pursuing a buy-and-build strategy, meaning competition for those businesses looking to sell is fierce. Companies must be able to offer their M&A targets something that appeals, and in this industry, which is so relationship driven, company culture is a key part of that. Insurance is similar in terms of consolidation model, and ECI-backed Clear Insurance, an award-winning commercial insurance broker, has found that focusing on how clients and staff are looked after, has helped them differentiate themselves from other acquirers.

 

Furthermore, in the increasingly competitive buy-and-build environment of the wealth management space, we’ve seen an increasing number of firms consider different acquisition models to set them apart. For example, some wealth management businesses have given the vendors a “try before you buy” period to give them some comfort in the consolidation process before they commit. Whilst deferred consideration is not unusual, it is normally to the benefit of the buyer rather than the seller and gives the vendor more comfort about what the process might look like and what it would mean for their company in the longer term. Whatever model you choose, focus on doing it well, being consistent with each acquisition you do.

 

 

 

 

 

 

 

 

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