Face time helps clients brave the storm

By Philip Porado | June 30, 2009 | Last updated on June 30, 2009
3 min read

Want to make your clients happy? Invest some time, says PriceWaterhouseCoopers’ (PwC) latest Global Private Banking and Wealth Management Survey.

Explaining recent spates of poor asset performance — in terms clients can truly understand — takes a great deal of face or phone time, the study notes. That’s a significant problem, since some firms have sought to manage costs by letting client-facing advisors go and consolidating accounts with fewer representatives.

“With CEOs fighting to salvage the reputations of their organizations and retain disillusioned clients, the people agenda is no longer a top priority,” the study says.

Not the best strategy, says PwC, because its survey of advisors found that many don’t have the skill sets to work effectively with clients.

“Many [advisors] have neither the experience nor the training to deal with the challenges that today’s economic crisis brings to wealth management,” the study says. “Their communication skills have been found wanting as they have to deliver bad news to clients and respond to mounting frustration and increasing demands for greater transparency.”

Survey authors note that during an economic crisis, the firm’s focus should be on sustaining and maintaining client relationships. “This goal can be achieved more easily if the client base is clearly defined and clients feel emotionally attached to the [advisor],” they said. “Furthermore, [advisors] need to develop much stronger advisory skills, as well as raising their knowledge in areas such as tax and risk.”

This hasn’t escaped advisors.

The study found that advisors, in many cases, are aware of their shortcomings and are actively seeking training to improve skills. Advisors surveyed for PwC’s 2009 study mentioned client-handling skills, taxation updates, intergenerational wealth transfer and financial markets updates as the top areas for which they wanted and needed training.

Study authors noted that their 2007 survey showed similar advisor requests for training — and urged firms to revisit developmental regimes quickly to ensure they’re producing advisors who have relevant tools and skills to navigate customers through rough times.

Firms should also strive to retain their top advisors, because this recession won’t last forever. “Wealth managers need to ensure they look after their talented [reps] now…to prevent an exodus of talent later,” the study said. “Even in a crisis, steps to engender a positive work environment and help increase loyalty to the organization are critical.”

This is especially true since the study found smaller wealth managers taking advantage of the crisis either by moving to rivals that need people who can handle clients effectively or by opening boutique shops that provide the high-touch service levels clients now crave.

Contrary to conventional wisdom, the study found that economies of scale really don’t help to improve the profitability of wealth management firms. “How large an organization is has little bearing on how profitable it is,” said PwC. “And size simply for size’s sake does not appear an attractive goal for wealth managers to pursue.”

And, in what almost looks like a nod to the U.K. Financial Services Authority’s recent efforts to ban commissions, the PwC study urged firms to revisit the way advisors are compensated as a means toward improving the quality of advice clients receive.

“Long-term remuneration packages must be redesigned to encourage responsible behaviour and delivery of consistently good client advice,” the study said.


Philip Porado