The recession hit everyone hard several years ago and, barring a few aftershocks, recovery has been slowly gaining ground. As investors across the globe try to deal with the tremors caused by the economic and financial services crisis, new wealth is being created and growing in the East, while the West shows it is growing still. Globally, growth impacts the wealth management industry by spurring on new competition and creating opportunities to capitalize on change through expansion.
In the East, financial services firms who are capable of doing so are opening new branches and service lines to deal with the growing demand. Several of the industry’s more global competitors are focusing more on the Eastern or South East Asian countries as well. In Germany, wealth is accumulating by nearly 200 billion Euros every year — growth that has caused firms in Germany and other European countries to reevaluate their business goals and efficiencies.
I see the wealth management industry in Germany dealing with several challenges in this recovery growth period. In addition to addressing new regulations focused around consumer protection, firms are experiencing increased pressure to maintain profitability amid a new environment of more transparent, and most likely shrinking, revenue from sales commissions. All the while, advisors continue their efforts to reassure clients whose trust in both the markets and wealth management advisory services in general has been shaken.
To take advantage of opportunities in the current climate and rebuild investor trust in the market, wealth managers have to focus on deepening their client relationships. Tactics should be included in their business goals to better understand their clients’ goals and objectives, their rational or irrational behavior, and to increase transparency. By deepening client relationships, wealth managers can help ensure that clients invest in the products and approaches they recommend. In addition, relationship building helps assure that they keep valued clients during times of uncertainty. It may also result in the acquisition of additional clients through positive referencing, which is the type of expansion every wealth management firm hopes to achieve.
What methods are you employing to help deepen and strengthen client relationships?