The credit crisis’ devastating impact on the global banking system has caused unprecedented challenges for the wealth management industry. As advisors attempt to manage the crisis and rebuild their client relationships, senior-level wealth management executives are taking steps to weather the storm and strengthen their firms in the process.

At the inaugural Wealth Management Congress in Boston in mid-September, NorthStar, a wealth management software provider, sponsored a roundtable discussion for wealth management executives.  A consensus on how to counteract the crisis emerged. Specifically, the twelve senior executives who attended the roundtable concluded that firms need to put far more focus on the fundamentals of wealth management – improving client communication and service, supporting advisors, improving competitive differentiation, and using technology to increase efficiency. At many firms, unfortunately, these fundamentals have been overlooked, causing client dissatisfaction and contributing to greater churn.

Increase Client Communication and Service

The primary way firms are responding to the financial crisis is to increase the service they provide to their clients — more frequent communication, ongoing review of their asset allocations, and especially taking more time to walk through portfolio adjustments.

Many firms are bringing their affluent clients back to the fundamentals of investing.  “We’re trying to relate the client story to long-term, life-based goals,” said Jeff Hazelwood, Director of Strategy and Innovations at SEI Corporation. Susan Hirshman, Consultant and former Managing Director at JP Morgan Asset Management, agreed. Client goals should be developed for “must-haves, nice-to-haves, and aspirations” so that during a down market, must-haves will not be in jeopardy, she said. 

Communicating closely and often with clients about their portfolios is a subtle way to educate them about market realities such as the cyclical nature of returns and the need for diversification so that clients will be prepared for the down times.  But many firms did not take the time to educate their clients, reported one attendee, and now their clients are surprised and anxious about losing their wealth.  Many will, no doubt, be shocked when they receive their annual portfolio report at year’s end.

Display article as PDF for printing.

Would you like to send this article to a friend?