With increased competition, rising operating costs, pressure on fees, hampered economic growth, and ongoing geopolitical factors such as Brexit and the Ukrainian war, Europe’s private banks have been leaning into a strong headwind over the past few years. It is a situation that has led to strategic drift in many instances as banks lowered their thresholds. However, over time, this has led to severely strained resources as advisors struggle to manage an excessive number of lower-value clients. Consequently, CEOs are now being forced to recalibrate and consider how to refocus on their core business – managing finances for HNWIs, who have the potential to be much more profitable.
So, how can this be achieved, given that a raft of adverse external forces is still at play? The answer lies in securing a solution that can achieve a successful segmentation of the client base. Once data is properly aggregated, a superior view of each client can be obtained, helping advisors to fully understand where their time is best invested.
Using segmentation to be more strategic
Clients need to be filtered and their inherent value wholly comprehended because an analysis of net worth alone may not reveal their potential; a ‘small’ client can easily morph into a ‘big’ client overnight via an intergenerational transfer of wealth, for example. Fail to recognise such connections and sufficiently nurture such clients, and in time, they will likely defect. Some 65% of HNWIs surveyed for the World Wealth Report 2024 confessed they were ‘concerned about a lack of personalised advice’ which is something of an indictment given Capgemini reported a statistic of 60% back in 2020.
Without the depth of insight offered by segmentation, banks may find themselves entering into a cycle of decreased profitability. Time per client will invariably decrease, along with the fees. Overburdened and disengaged advisors will go where their skills can be better utilised. Plus, some clients may find themselves left behind and not communicated with regularly, thereby further driving down customer satisfaction and AuM.
Identifying the next best actions for HNWIs
The optimal technology will not only identify your target market but also support the implementation of the next best actions to nurture that market and gently push others away. Advisors need to be proactive and not reactive anymore. So, rather than applying a broad-brush approach that fails to deliver a personal approach, HNWIs and UHNWIs can be targeted more effectively, via a series of micro-campaigns driven by their investment goals, life stage and preferences.
Our solutions, WDX1 and CLMi, fully support this approach via intelligent and industry-leading marketing automation platforms. These platforms’ capabilities extend far beyond marketing interactions and into tracking each client’s level of engagement in a campaign:
“By leveraging smart segmentation and proactively offering tailored next-best actions, advisors can have much more meaningful and value-added dialogues with their HNWI and UHNWI clients. This not only demonstrates a deep understanding of each client’s unique needs and goals, but also an unwavering commitment to their financial success. Such a personalised, consultative approach builds immense trust and loyalty, ensuring the client views their banker as a true partner in wealth management rather than a transactional service provider.”
Benjamin Labrousse, Manager Pre-Sales, EMEA, Wealth Dynamix
Focusing on your core business
For clients of lesser value, improved segmentation can support re-engagement without the need for human expertise – an optimal way to remain compliant and act in the client’s best interests by offering opportunities for growth without the need to increase internal headcount. In this way, previously stretched advisors will find they are freed up to support HNWIs who require specialised services aligned to higher fees.
Hearteningly, The World Wealth Report 2024 by Capgemini suggests that those strategising to refocus on their core market should find themselves in relatively fertile territory, with a ‘significant investment shift’ reported globally. The report divulges that HNWIs are ‘reaching unprecedented numbers and wealth levels’. The European HNWI population is said to have risen by ‘4% in 2023, with HNWI wealth rising by 3.9%’ – though both Italy, ‘where wealth grew by 8.5% and population by 8.4%’, and France, ‘where wealth and population grew 6.5% and 6.4%’, are out-performing these global growth rates by some margin.
Improved lead management
Despite the growth of HNWIs globally, many generic CRM solutions lack robust lead management capabilities for attracting and engaging new financial prospects, which can make creating a positive first impression with this elite group particularly challenging. Bespoke wealth management CLM technology can transform the client acquisition process, yet even today, our experts meet wealth management professionals who rely solely on pen and paper.
We offer CRM solutions with a powerful lead management focus, connecting the client data with their financial information for an improved experience.
Key capabilities within WDX1 and CLMi include a drag-and-drop feature so advisors can manage their leads and see all prospects and their stages in one place. Additionally, 360-degree dashboards support a hyper-personalised style of communication; dynamic forms minimise the time-sink associated with paperwork and early-stage data capture plus the tracking of client interactions starts building an accurate profile for a fast and frictionless onboarding.
Value-added services
It’s clear that to retain HNWIs (possibly throughout the generations), advisors must build sufficient trust and a sense of their expertise through a level of service that not only meets their clients’ individual and often sophisticated needs but also forecasts them. A tailored, personalised style of service is the aim, and bespoke CLM technology can assist the advisor greatly by flagging when a client interaction is most prudent, be it in the face of market volatility, a notable life event or a new opportunity that matches their investment preferences.
A holistic approach is vital, making the role of AI and intelligent technologies particularly critical in reducing the cost to serve, given the complexity of the relationship. The 2024 Wealth Report suggests the advisor’s role is getting ever weightier in the wake of some of the market bubbles, such as cryptocurrencies, bursting. Interestingly, of the 3,119 HNWIs surveyed, 79% confirmed they would look to their advisor to help protect them from their own biases (and emotions) when making investment decisions, for example. Such matters demonstrate the relevance of being able to gain deeper insight through lifestyle and attitudinal data to meet the expectations of HNWIs fully.
Working towards a more sustainable future
In summary, in the current environment, refocusing on the core business of managing HNW finances will prove important for many private banks in pursuit of sustainable profitability and growth. Effective client segmentation will be key. Only through deeper insight, the precise tailoring of services, and a laser-focused view of their most profitable clients will advisors be properly equipped to meet the needs and wants of this highly agile and demanding market.
By integrating proven bespoke solutions, banks can enhance their operational efficiency, foster stronger, longer-lasting client relationships, and support their internal teams to work more purposefully.
Wealth Dynamix assists private banks and wealth management firms to be more efficient and strategic through data-driven insight. Our solutions support the entire client lifecycle to increase productivity and profitability and improve client satisfaction whilst assuring compliance.
