The emerging affluent client
Finally, the BCG maintained wealth managers need to recalibrate their approach to servicing clients to reflect a changing and increasingly diverse client demographic.
In particular, the BCG viewed the emerging segment of affluent clients, who hold 30% of global wealth and account for 6% of households, as an increasingly important group for wealth managers to target with advisory services.
Wealth managers, however, beg to differ. The BCG discovered that 58% of wealth manager respondents planned to decrease their share of affluent clients over the coming three years.
“In our view, this may be a missed opportunity, as gaining share among affluent clients is a relatively direct way to generate revenues through volume, using a standardised service model that is appropriate to clients whose investment needs are typically straightforward,” the firm explained.
The BCG speculated that many affluent clients who graduate into the high-net worth (HNW) category, might be more likely to enlist the services of professional wealth-management services after discovering the benefits of such a service early on.
To tap into and best service this emerging client segment, it’s important wealth managers understand their needs and wants.
Unlike their HNW counterparts, the BCG said the affluent client viewed a wide variety of products as less important than price considerations and minimised fees. And a whopping 71% of respondents reported fee levels were a top three-criterion in choosing a wealth manager.
The BCG also found that this type of client tends to be highly engaged in the investment process and technologically savvy. “One third of our client-needs survey respondents cited digital sophistication as a top reason for choosing a wealth manager, yet only 7% of our wealth-manager survey respondents said that they had a targeted and individualised digital platform,” the management consulting company said.
So really, by devising creative solutions to the former issues of tightening regulation and accelerating digital innovation, wealth managers have the opportunity to kill two birds with one stone and simultaneously tap into the increasingly important affluent client segment.
By taking a client-centric position across all segments and articulating the benefits of service levels, products and interaction channels, wealth managers can “lay the foundation for providing a unique and engaging client experience,” the BCG concluded.
