Wealth managers must adapt to better meet clients’ changing needs

par Natasha Tremblay | March 10 2017 09:45AM

Changes need to be made to the private wealth management profession to better address the needs of investors, according to CFA Institute, a global association of investment professionals. This was the core message in a speech delivered by CFA Managing Director of the Americas, John Bowman on March 7. He spoke at the Institute’s annual Wealth Management conference, held in Nashville. The CFA released highlights from his speech in a press release the same day.

During his speech, Bowman announced the results of research done by the CFA and Scorpio Institute, The Value of Premium Wealth Management. They found that though advisors and clients have different ways of defining value, it is possible for advisors to bridge the gap through communication, transforming and broadening services, as well as adapting to the needs of millennials.

Cater to specific, real-world needs

Bowman said that "as a wealth management professional, the one characteristic that should define us is our motivation to deliver the most value to our clients. How investors are defining that value is rapidly changing today. The challenge for advisers in this environment is to communicate the value of our expertise and technical knowledge to clients while also catering to clients' specific, real-world needs."

Key findings of the research include communication, integrity and financial acumen as necessary to win over investors. It also found that one in four wealthy individuals do not use an advisor. “Of the 4,000 representative sample in the study, 25 percent of wealthy individuals are not currently using an adviser due to high costs and they do not believe that advisers act in investors' best interests. Advisers must better define and defend their value proposition as wealth managers to avoid disintermediation,” says the CFA.

Holistic wealth management

The study also found that clients are more interested in holistic wealth managers serving their broader wealth-related needs. They want advice on topics such as family enterprise management, philanthropic strategy and specialized investment topics, including hedge funds, real estate and sustainable investing.

The study also says advisors should embrace technology to serve millennials better. “Seventy percent of millennials believe the core value of a wealth manager is the strength and breadth of their digital offerings, and 89 percent think integration of robo-advisers is important. Convergence of digital platforms and sound advice will define the future successful adviser.”

Bowman described the future adviser as “a champion of client value. We must be open to change, and have the courage to pivot and innovate in order to enhance client relationships."

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