Four barriers wealth managers face when attracting & retaining customers

Navigating everchanging expectations from customers, as well as new rules from the Financial Conduct Authority (FCA) to ensure that increased consumer protection is in place, has led wealth managers to not only find new ways to better understand their existing clients, but innovate ways to identify and attract new high net worth individuals (HNWI). This has caused many wealth management firms to scramble to increase their digitisation and customer-first policies quickly and effectively.

The ability to define these HNWI and UHNWI can be cumbersome, especially when the HMRC, FCA and individual banks and wealth managers all use varying criteria to measure this. Wealth and asset management firms looking to grow their business through the acquisition of these individuals will have to consider the importance of overarching data and scalable transformation to do so.

While you may recognise the need to better understand your clients, legacy practices and technology can often hold you back. Currently, we have noticed four major barriers in attracting and retaining customers:

1. Sparse investor data to inform decision making

Building a high-net-worth portfolio of investors requires the right financial products. Financial and consumer data products that identify people with incomes above £100k are far and few. This makes differentiating between an investor earning £100k and an individual with a £500k annual salary complicated, and identifying and targeting high-net-worth groups a challenge.

You cannot rely on your clients’ intergenerational wealth either as, once it is passed down, it is often the case that inherited wealth will be spent or not reinvested. However, if it is reinvested, it is often done with other brands, as different investor groups have different needs. This can leave you questioning how much wealth will actually remain with your client.

2. Lack of understanding of current and future investors’ needs

Once you acquire a new HNWI investor, utilising your cross-sell and upsell capabilities to extract the most benefit from their available wealth will be crucial. The ability to understand your clients is paramount, including both present and future needs in order to establish a long-term relationship.

Consumer Duty has been introduced to make firms more accountable over the suitability of their products and services, to meet the needs of those they are sold to. You will need to review the entire investor lifecycle and journey, revisit how and what to include in your marketing strategies, and establish new ways to measure all these areas to remain compliant and trusted.

Outreach to younger target investors

Younger investors are not as likely to behave as their older counterparts. For example, they may not necessarily attend the same in-person industry events, and often need to be targeted and communicated with via digital channels or social media. They will also want to manage their assets via digital platforms to be more self-serving. This means you need to work harder to intrigue and engage with younger investor audiences.

3. Maintaining GDPR (General Data Protection Regulation) compliance

By attempting to reach your target investors via additional or new channels, you must consider data protection and GDPR. Substantial penalties can come with breaches; therefore, you must ensure that any data handling is done carefully and correctly. Plus, you need to provide clarity to your audience as to where you have sourced their data from and why you are legitimately contacting them.

4. Delayed response towards technology-first approaches

The last five to 10 years have seen a significant move towards digital transformation and customer-first policies, particularly with banks and building societies. While this ongoing transformation has been relatively steady for some sectors, the wealth and asset management sector has struggled to adapt.

To appeal to investors, brands must now adopt and embrace digital practices by implementing business models that will facilitate customer-led and technology-first transformation.

How can CACI help?

CACI is already a trusted partner to leading wealth and asset management firms, supporting investor acquisition and retention through predictive analytics and data solutions.

Throughout this blog series for the wealth management industry, we break down the opportunities for businesses to attract and retain high-net-worth individuals. Continue reading at the links below:

Blog 2 – How to identify, attract & retain high net worth individuals

Blog 3 – Three reasons why wealth & asset managers need young investors

Blog 4 – How CACI supports the wealth management customer journey

Whitepaper – Acquiring new high net worth clients – What wealth managers need to know

Or to learn more about how CACI can help your firm overcome barriers in this area, explore our services or get in touch.