No “One Size Fits All” – Personalized Client Service and Social Selling in Wealth Management
By Frank Bertele
Founder and CEO, NETZ
The Era of Wealth Management /Private Client Disconnect
We have entered an era of increasing disconnect between wealth managers and private clients. A survey1 shows that the most important element for a private client in a wealth management relationship is a “client-focused service”, or in other words a personalized customer experience (65% of responses). However, today’s wealth managers do not seem up to the task, as the vast majority of clients complain that their adviser is not able to deliver a client-centric experience throughout the relationship cycle and that they feel misunderstood in terms of product and risk preferences.
In a world where digitization and more competition is constantly increasing the competitive pressure, and time spent on regulation and administration is eating up time spent with clients, wealth managers need to adopt quickly. The flaws within the private banking industry have been exposed and can no longer be masked by strong investment returns.
Starting a New Approach
At first glance, you are probably wondering how it’s possible to become more client-centric with less time available for clients. The historically prevailing mindset of “more time spent with clients = more revenues” fails to deliver. Today the equation is “the right amount of time spent with the right client providing the right advice = higher revenues”. A higher level of “personalization” during each step in the sales process, as shown in Figure 1, is crucial for today’s wealth management clients to foster long-term, sustainable client relationships, increase customer satisfaction and loyalty, and thereby drive higher revenues and higher sales productivity. At NETZ we have built services optimizing and automating personalization and social selling techniques around the sales process. By embracing social selling, leading studies show that you can achieve:
- +16% increase in revenues per year;2
- +45% increase in sales opportunities;3
- +20–25% increase in sales productivity.4
Figure 1: Social selling
Source: NETZ CMS Limited
Step 1. More Targeted Prospecting
The foundation of a personalized customer experience is identifying and targeting the right audience. The marketing term is “persona”. By targeting individuals or businesses with narrow characteristics such as age, job title or wealth, wealth managers can be much more specific in engaging with the audience. A targeted prospect would be, for example, “individuals based in London, working in financial services with a wealth of £1–5 million” or an “individual based in London who has recently sold his company and therefore acquired wealth”. The more narrow your list of prospects and audience, the more personalized your approach can be.
While there are a lot of tools available such as pay-per-click advertising, social media, email marketing and external lead providers, only very few tools allow for a very targeted campaign for wealth management purposes, where the affluence or level of wealth is important.
Step 2. More Personal Engagement and Awareness
Having defined the target prospect, attention now shifts to creating awareness and engagement with your audience. For us at NETZ, it is surprising to see how many wealth managers still rely on cold calling. Only 28% of cold-called leads engage in conversation, and only 1% of cold calls lead to appointments.5 Further, the quality of leads is poor, as a cold call feels intrusive and aggressive. Cold calling is obsolete; the best leads are those that make a conscious decision to engage with you.
How can you create engagement?
Best practice marketing dictates a so-called “value exchange” with your prospects. You should aim to provide value to your prospects before pitching to them. Value can be provided by sharing interesting and relevant content (so-called “content marketing”), invitations to free events or webinars. By developing a sequence of personalized, valuable messages, you are able to build trust and ensure you are at the forefront of their mind when it comes to making a decision.
At NETZ we are big advocates of email marketing (through our Dynamic Email Playbook service), because it can be highly targeted, highly personalized, very friendly and non-intrusive. Those prospects responding are genuinely interested in engaging and finding out more. Moreover, email marketing is the most cost-effective tool as it can be highly automated.
Step 3. Offering a Bespoke Value Proposition
Based on your value exchange you should have built a list of qualified prospects who have engaged with you. The objective now is to introduce your value proposition in the most personalized way possible. Highlight how you can help the prospect, provide fact sheets or case studies to underline the value you can generate. And, most importantly, be fully transparent on your fees. Awards and testimonials are good, but only once the prospect asks for more details.
Based on the response of your qualified prospect, we recommend splitting the qualified prospects into two groups: (1) interested right now and (2) interested but not ready to commit yet. Group 1 has indicated that they are looking for advice right now and are able to act soon; therefore jump to step 4 of the sales process. Group 2 should go through a nurturing campaign and keep receiving more value (see step 2) by sending them interesting articles, news and invitations to events.
The most common mistake of wealth managers is thinking too short-term, discarding any qualified prospects which are not ready to commit yet. They made the effort of engaging and qualifying prospects but because the time might not be right for a prospect, they stop engaging altogether. Based on NETZ market research we had introductory meetings with 30 wealth managers from small and large firms, and six months later only 2(!) wealth managers are still touching base at regular intervals. In other words, more than 90% of wealth managers stop engaging if a prospect is not ready to commit right now in the moment! A study shows that persistence is key in winning clients.6 On average, 12 touch points (6 phone calls, 3 voicemails, 3 emails), including social interaction, are necessary to convert a qualified prospect into a client.
One important element in building relationships with prospects is the response time once a prospect has reached out to you. Very often, wealth managers do not respond to a lead quick enough and wait for a day or more. A study7 shows that the time for a first response is directly linked to the success of converting a prospect into a client. The study further shows that the odds of the lead becoming qualified are 21 times greater when contacted within five minutes versus 30 minutes after the lead was submitted. Now, we know that wealth managers are generally very busy and a five-minute response time might not be realistic; however, the key message is that the faster you can respond to a prospect the more likely you will be to turn the prospect into a client. Best practice would be to hire a marketing assistant to respond to emails or calls quickly on your behalf, or use automated email platforms which can be set up in no time.
Step 4. Impressing in Meetings and Closing Deals
Once your qualified prospects are interested in your service, the next step is to impress them in a meeting. As with the other steps of the sales process, personalization is key! At NETZ, we always argue that the first meeting is a unique chance to start connecting with your future client and building rapport. In order to impress, it is invaluable to conduct research and refer to personal circumstances or news about the individual, the individual’s company, the industry, or any personal news such as promotions or achievements. In the meeting you might want to invite them to an event they care about, for example a seminar on tax-efficient investments, to sports matches or to the opera.
From our market research with 30 wealth managers, only four impressed in the first meeting and were able to build rapport by knowing details about me and the company NETZ, such as when we started, recent industry news and press articles we were mentioned in. These four wealth managers cared. The other 26 wealth managers were simply running through their services, awards, investment performance and trying to extract information for a fact-find. It is clear which wealth managers are more likely to successfully win our business!
While LinkedIn is a good way to get an understanding of a prospect’s professional experience, there is much more insightful information available on the web and going the extra mile will pay off. There are several automated research services such as NETZ which do not cost much.
Step 5. Optimizing Client Retention to Drive Organic Growth
Once your prospect has turned into a client, the key objectives are delivering an excellent service and retaining the client, in order to maximize the client’s lifetime value (CLTV) and get referrals.
Many new clients start a wealth management relationship by investing a relatively small amount compared with their total amount of assets. The drivers for maximizing the amount your client invests with you are: (1) the quality of your service; (2) personalized and bespoke advice; and (3) personal relationship.
While points 1 and 2 are at the forefront of the minds of most wealth managers, point 3 is often forgotten. Also, clients have to be nurtured and managed. Alongside the usual asset reviews, clients will appreciate personalized notes from you (for example for birthdays or a promotion). Depending on the value of the client, we recommend small presents and invitations to events they enjoy (for example, sports matches or the opera). Furthermore, by staying up to date with clients’ circumstances and news, wealth managers can find valuable engagement triggers.
Beyond keeping a fact-find on your client in a customer relationship management (CRM) tool, today’s technology allows for tracking clients’ personal circumstances, such as news, achievements and shareholdings. These technologies are essential in staying up to date on your clients and finding engagement triggers.
Ultimately, a happy client will automatically bring more assets onboard and will be more likely to refer a wealth manager to his colleagues or wealthy friends.
There is More to Be Done in a Slowly Changing Landscape
Historically, a lot of innovation has happened in back and middle-office functions, and in financial services for retail customers. An area which has seen virtually no innovation is front-office/business development for private clients. A growing number of wealth managers have recognized that a light-touch, one-size-fits-all approach might do the trick for retail clients but it does not work for affluent and high-net-worth individuals.8 Some financial institutions have even changed their staff training and compensation structures to put more emphasis on client satisfaction and personalization. Much more has to be done. While US institutions are embracing technology and social selling techniques to foster long-term, sustainable client relationships, the UK and European markets as a whole are lagging behind.
By applying technology and best practice techniques to foster personalization and social selling, wealth managers increase lead conversion, grow customer satisfaction, and thereby drive higher revenues and sales productivity. Today’s wealth managers do not have to become experts in the sales process but they have to become aware of what is necessary to win, and that there are technologies and tools to help. Now that is how you can become more productive: “Spend the right amount of time with the right client providing the right advice!”