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In the driver’s seat

This week, I had been hoping to write about the series of unfortunate events happening to and around Keydata Investment Services but I still have absolutely no idea what is going on. Mind you, that is something I appear to have in common with almost everybody else connected with the matter – whether it be the regulators, the investors or Keydata itself.

Perhaps the company, or anyone else interested in finding out what happened to the missing SLS Capital assets should be looking to hire a medium to contact one of the key players, who cashed in his chips in May – and I mean that purely as a metaphor for “died”.

Of course, not knowing all the facts does not necessarily preclude me from writing a column on the subject and indeed, in some cases, it can be a positive advantage. However, I get edgy when people start reaching for their lawyers, as some unhappy SLS investors have just done, and so I have decided to concentrate on a different lack of knowledge altogether.

This stems from the freshly published 2009 World Wealth Report from Merrill Lynch and Capgemini, which I had planned to write about last week before that pesky RDR got in the way of things.

One small part of the research highlights the numerous demands that wealth management firms face in a bid to get the best out of what it calls “fluid firm-adviser-client dynamics”. Translating from consultantese, I believe that is a euphemism for dealing with investors who are coming to terms with portfolios a lot smaller than they used to be and now looking for someone to blame.

As a result, says the report, firms – and I hope I am justified here in redirecting the contents of what is essentially a look at the world of high net-worth advice towards the interests of the Money Marketing congregation – “need to look anew at the assumptions behind their value proposition and see how that proposition must change with the times”.

On the positive side, it seems that advisers do understand the top drivers of client retention. For example, according to the report, 88 per cent of high-net-worth individual clients surveyed said service quality was a “very important” reason for staying with their wealth management firm in 2008 and 87 per cent of advisers anticipated that would be the case.

The report finds advisers also understand the similarly high-priority clients place on portfolio performance and investment advice. Well, so far, so good – high-net-worth advisers are up to speed on their clients being quite keen on good service, investment performance and advice although perhaps we will not be holding the front page for that.

Beyond these factors, however, the World Wealth Report’s analysis highlights four other drivers that are highly influential in prompting clients to stay with a firm or adviser, yet are “vastly underestimated” by advisers.

These so-called “levers”, according to the report, “offer significant potential for improvement because they contribute tangibly to retention in a way many advisers apparently do not fully understand. This suggests that firms and advisers have yet to address them fully.”

These client-retention levers kick off with online access and capabilities, which were deemed very important by 66 per cent of clients but only by 32 per cent of advisers while statement and reporting quality scored 63 per cent against 39 per cent. Risk management and due diligence capabilities scored 73 per cent and 54 per cent and, topically enough, fee structures were seen as very important by 66 per cent of clients but only by 32 per cent of advisers.

This retention analysis also revealed some areas that advisers overvalue, particularly their own relationship with the client (92 per cent against 73 per cent of clients) and their firm’s reputation (76 per cent against 59 per cent). According to the World Wealth Report, this suggests “advisers have yet to adjust to the new reality in which trust and confidence in advisers, firms and the financial system have been eroded”.

It also suggests that, should they feel like it, any IFAs not planning to be decimated by the RDR proposals could steal a march in picking up some high-net-worth clients. Just thought you ought to know.

Julian Marr is editorial director of


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