With a stream of new entrants and online services springing up the advisory industry needs to adapt in four main areas in order to retain existing clients and attract new ones, according to Pershing.
Pricing is the first of these areas. Pershing says there is work to be done still in demonstrating the value of advice by providing clear, competitive charges, and a ‘clearly differentiated business model’.
The next area is firms’ client base. Wealth managers should be thinking more ‘long term and multi-generational’, targeting the children of current clients to bring in the next crop of business.
Then there is the product or service offering itself. Pershing advises firms to adapt their offering to changes like the new pension freedoms and the increased demand for online service.
The final of Pershing’s four key areas is human capital. Firms should be investing more in the retention and development of staff as well as actively recruiting new talent, Pershing said. Underinvesting in order to bump up profits in the short run is detrimental for future success, the firm warned.
“New opportunities for growth are continuously emerging in the wealth management sector and firms need to plan carefully to ensure that they are making the most of this,” said Ileana Sodani, chief relationship officer at Pershing.
“Advisers need to anticipate their clients’ demands and adapt accordingly to ensure their service offering meets expectations at all times,” he added. “This is more important than ever as new business models enter the market and competition increases. Delivering outstanding service will retain clients, encourage other family members to use your services, and generate referrals to support new business relationships. Client retention and attracting new clients need to be balanced carefully to ensure profitability and long term success.”