KEEP YOUR COMPETITORS CLOSE BUT YOUR CLIENTS CLOSER
Discussions with wealth managers, especially those regarding client experience and Scorpio’s ability to benchmark one firm’s performance to that of others, often yield similar ‘get out of jail’ retorts:
“We are different from other wealth managers so can’t measure ourselves against them”.
And indeed, there may be differences relating to product, process or business model, which are important differentiators to highlight — but to what extent are these distinctions important to clients and do they see them as more than just nuances?
To unravel these questions, firms first need to understand who the real competitors are.
From a business perspective, comparing revenue streams, profitability and market share with firms operating on similar business models may seem like appropriate competitor analysis. But to your customers, ‘competitors’ play on a much broader wealth spectrum.
Our research shows that regardless of how clients learn about a firm — be it a recommendation or independent research — certain behaviours and attributes consistently emerge as more valuable than others (see Figure 1).
Figure 1: Top five brand attributes in the UK
Combining these behaviours with a strong brand identity often yields most promising results — and this comes to the fore time and again when we survey both individual firms and the wider market.
For example, across the UK wealth landscape, names such as Barclays Wealth, Hargreaves Lansdown, St James’s Place and Rathbones consistently top in customer awareness ‘league tables’. And therefore, perhaps unsurprisingly, they are also among leading managers of wealth (in terms of AUM), despite operating on very different business models.
In other words, when a client is looking for smart solutions and intelligent ways to achieve their goals — more often than not there’ll be more than just your direct competitors, steadfast and ready to serve for a share of their heart, mind and wallet.
There are also signs indicating that clients, who have been with their current wealth manager for over a decade, may be getting itchy feet. Our research suggests that as many as two-thirds of these longer term clients are considering a new relationship (see Figure 2), and it may just surprise you with who.
Figure 2: Relationship length and frequency of change
- When was the last time you changed your main private bank / wealth manager?
- Are you currently considering starting any new private banking / wealth management relationships?
At this point, having an open mind towards client experience insight becomes crucial.
Indeed, firms that truly focus on the customer understand that their own perception of the business might not be the same as their client’s. By better understanding the gamut of players on the field and how their efforts are being perceived — firms become better equipped to reshape and strengthen shaky relationships, and retain existing clients.
While on the business side, benchmarking against a more holistic range of competitors empowers businesses to better distinguish themselves and their offering.
As such, firms should not shy away from being compared against one another but rather use this competitor knowledge to enhance their existing proposition — and demonstrate to clients that they can deliver solutions worthy of their attention.
Thought for the week:
“The entrance strategy is actually more important than the exit strategy.” Edward Lampert, American businessman and investor
Read more on our website: www.scorpiopartnership.com