research from Reuters and Booz Allen Hamilton shows private banks must improve the value of their service for high net worth clients
If banks are to retain and grow their customer base, the role of the private banking adviser needs to evolve, according to research conducted by Reuters and Booz Allen Hamilton.
The research was based on in-depth interviews with 60 advisers from 27 private banks in UK, Germany and Switzerland, plus 60 clients of private banks from the same three countries. It looked at how well these clients, high net worth individuals each with an average wealth of o4.7m, view the service provided by their private bank.
The survey showed private banks must improve the value of their service through the development of advanced client risk profiling and tailoring of investment strategies, offer best of breed products, a pricing and incentive structure and an ongoing flow of new investment ideas.
More effective processes, client management and information filtering tools are required to enable relationship managers to spend more time with clients and less on administration.
Banks should transform the role of their advisers into that of trusted advisers by focusing them on client management and supporting them with performance management systems that encourage more pro-active relationships with clients.
Alan Gemes, vice-president of Booz Allen Hamilton, said: 'Private clients are not satisfied with the service they are receiving and are reconsidering their options. Banks prepared to face up to the challenges are likely to reap the rewards of enhanced client satisfaction, reduced client churn and increased referrals.'
The report showed while some clients receive excellent service from their private bank, many others are dissatisfied.
Many clients feel their banker neither understands their investment needs, nor provides tailored advice. This was found predominantly in Germany where participants felt their bank was more focused on selling them generic, in-house products.
Areas for improvement highlighted by clients included: access to a competent and reliable point of contact; 100% correct transactions; easy-to- understand reporting; and more effective data capture to avoid constant repetition of basic information such as contact details.
Participants wanted a trusted adviser who could proactively provide a steady stream of personalised investment ideas.
The report demonstrated advisers spend too much time on internal administration, and not enough time with clients.
On average, most relationship managers spend 25%-60% of their time on internal administration, leaving only between five and 10 hours a year to spend with each client.
Advisers managing large numbers of clients were suffering from information overload, and were struggling to keep on top of the information they need to manage clients effectively.
Steve Lipper, global director of Reuters Private Client Services, said: 'The problems faced by the private banking industry are often attributed to market downturn, when in reality they are more about how valued or not customers feel. Those who recognise this, and take action to enable their advisers to offer the personal and proactive service clients want, will become tomorrow's market leaders.'
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