HNW clients embrace hybrid advice: study

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HNW clients embrace hybrid advice: study

In the early stages of a relationship, nearly two-thirds of HNW clients prefer to work directly with a wealth manager to address financial goals and risk tolerances

By Leah Golob | 

High net-worth (HNW) clients worldwide are expressing preference for hybrid advice models during the later stages of the wealth management process, according to the 2017 World Wealth Reportpublished Wednesday by Paris-based Capgemini.

The study surveyed HNW clients to measure how likely they are to embrace hybrid advice models combing digital tools with some level of human interaction throughout what the report describes as life cycles of the wealth management process.

These five life cycles are categorized as “profiling client needs, developing wealth strategies, executing investments and advice, managing the relationship and portfolio, and reporting on performance and adjustments, including detailed capabilities in these areas,” the report says.

That said, hybrid advice looks as though it’s here to stay since the youngest HNW clients across the globe (under 40 years of age), prefer a hybrid approach for all five life cycle stages, particularly during the “developing wealth strategies” stage (60.8%).

Overall, HNW clients welcome hybrid advice, but only after a wealth-management relationship has been developed.

For example, in the early stages of a relationship where an advisor profiles a client’s needs, nearly two-thirds of HNW clients (60.2%) prefer to work directly with a wealth manager to address financial goals and risk tolerances, compared to 37.1% of these clients in favour of hybrid solutions.

As the relationship evolves to the “managing the relationship and portfolio” stage, HNW clients prefer hybrid solutions (49.6%) to a wealth manager-led approach (41.4%).

The trend continues when the relationship moves to the  “reporting on performance and making adjustments” phase, with the preference for meeting with wealth managers dropping to 37.5%. A greater proportion of clients (42.7%) prefer a hybrid solution, while 19.7% desire an automated, self-service solution.

“With global wealth at record highs, the 2017 World Wealth Report findings are especially critical for wealth managers moving towards delivery of hybrid advice. Firms can jump start their hybrid journey by focusing on transformation related to people, processes and propositions,” says Anirban Bose, executive vice president, head of global banking and capital markets at Capgemini, in a statement.

As firms adapt their service offering to meet growing HNW interest in hybrid advice, they will also have to consider how these changes may affect their business models, the report says.

“The wealth manager role will likely evolve, requiring advisors to relinquish control to outside experts for input, as well as digital tools designed to aid them, such as Customer Relationship Management (CRM) and analytics,” the report says.

Although the report discovered that many firms are lagging behind in adapting their service offerings — despite having initiatives underway — satisfaction among North American HNW clients is moderately high. Specifically, HNW clients in North America gave a satisfaction rating of 79.4% compared to the global average of 62.4%.

The report is based on responses from over 2,500 high net-worth individuals across 19 major wealth markets in North America, Latin America, Europe, and Asia-Pacific.


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