Financial institutions have some work to do in using digital technology to connect with their high-end clients. According to The Futurewealth Report: The Digital Future of Client Relationships, which surveyed 3,477 respondents globally with an average of $1.9 million in net worth, banks and financial firms ranked lower than other luxury brands with a rating of only 71 out of 100. On the other hand, the study found that banks had improved the most among luxury brand industries in establishing personal connections, with an increase of 7.2% over the last year.
The report, produced by SEI, Scorpio Partnership, and Standard Chartered Private Bank, is one part of a four-part series that aims to better understand the ambitions and attitudes of the world’s up-and-coming wealthy (more at http://tinyurl.com/futurewealth-ababj).
Most banks serve clients throughout the economic strata—often with specific units dedicated to private banking and wealth management. But banks can still find success in specifically marketing their services as a luxury option.
“Like any business, you just need to be smart about where you apply that luxury label to the brand, so that it fits the segment you’re serving and doesn’t dilute its power across all segments,” says Al Chiaradonna, senior vice-president of SEI’s Wealth Platform solution.
One of the ways to market such a luxury option is by switching focus. “We have the most affluent population that we’ve ever had in America, and these people are really looking for advice. They don’t want to be sold an annuity, or a mutual fund, or a life insurance policy,” points out Barry Dayley, executive vice-president of Money Concepts, a wealth management company. “More than anything, they want advice from a trusted source.”
According to Dayley, the banking industry is ready for this switch in focus from products to advice. “A lot of banks have more cash than they need. They’re also trying to diversify their income and get more noninterest income,” he says. “So the situation is really ripe for offering quality wealth management services that would allow them to charge a fee, provide trusted advice, and really target their higher-end user.”
And what is the best way to target that end user? Technology. That may seem counterintuitive given the importance of advice, but according to the SEI survey, when buying a service or product from a financial services firm, respondents with more than $4 million net worth were influenced by online tools nearly as strongly as their previous experiences with the firm.
“This idea of a network of relationships being facilitated by technology is something that they’re accustomed to in their daily life, and they want to see other institutions provide them with that similar type of access,” explains SEI’s Chiaradonna.
But, he adds, banks need to figure out how to use technology in a way that facilitates the human contact.
“We should be saying to ourselves, ‘What are the behaviors and needs of the end client?’” he continues. “And given the behaviors and needs of this end investor, how are we, the banking institution, using technology to facilitate that in a way that they want it—not in a way we want it.”