Wealth Managers Must Educate Clients or Risk Losing Them, says GlobalData

In order to engage high net worth (HNW) clients in their allocation strategy and boost retention rates, wealth advisors will need to take a proactive approach, according to GlobalData, a leading data and analytics company.

In 2017 positive stock market performance skewed HNW portfolios towards equity investments. Given the recent market volatility, coupled with growing political uncertainty worldwide, investors are now unsure on which asset class to choose to rebalance their portfolios, and so hold on tightly to their current portfolio structure.

According to GlobalData’s 2017 Global Wealth Managers Survey, most advisors reported that they do not expect much change in what the average HNW portfolio will look like in 12 months. The only exception to this is alternative investments, with most respondents forecasting a slight increase over the coming year.

Investors are looking for new ways to diversify their portfolios during market uncertainty, and advisors must be proactive in providing guidance. GlobalData’s research also shows that volatile market conditions have a negative effect on retention rates. To put into context, investors’ fear of losing wealth prompts them to switch advisor.

GlobalData’s survey also found that Turkish and Chinese wealth managers were most likely to agree that volatile market conditions are having a negative effect on client retention rate, with 83.1% and 68.7% in agreement, respectively.

As Turkish and Chinese investors are more inclined to switch advisor than their global counterparts, competitors will find it hard to build client bases in these markets. In fact, competition among Chinese private banks is fierce, and wealth managers in the country are struggling to build loyalty.

Advisors need to provide well-designed education programs to their clients in order to guide them through market uncertainty and avoid them taking uninformed decisions driven by fear. Companies that are unable to bridge this knowledge gap will risk losing clients to competitors that can.

About GlobalData

4,000 of the world’s largest companies, including over 70% of FTSE 100 and 60% of Fortune 100 companies, make more timely and better business decisions thanks to GlobalData’s unique data, expert analysis and innovative solutions, all in one platform. GlobalData’s mission is to help our clients decode the future to be more successful and innovative across a range of industries, including the healthcare, consumer, retail, financial, technology and professional services sectors.


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