Wealth Biz Buzz

Before we delve into the topic at hand (one which continues to be of growing concern to our bank clients), let me apologize for the infrequency of our posts as late.

This does not represent a lack of interest on our part, rather it emanates from an increased level of immediacy on the part of our clients.

In addition to our work helping a number of banks increase the efficiency and effectiveness of their wealth management businesses through integration, I was honored to recently address the Wisconsin Bankers Association on this very topic at a meeting held at Lambeau Field .  How cool is that – presenting at an utterly inspiring venue (literally the home of boyhood heroes, gridiron legends and past and current world champions).  

So, beside blogging about the importance of integrating these business lines, I have also had the privilege of travelling throughout the country researching, learning, educating, speaking and otherwise addressing the nuances, benefits and pitfalls of integration.

On one such trip to Florida, I struck up a conversation with the gentleman seated next to me on the plane.  He was headed to the sunshine state to meet his boyhood chums for their annual sojourn; playing stickball and then following their favorite major league baseball teams around the state during spring training.

When asked why I was headed south I shared with him I was giving a presentation on wealth management trends at the Bank Insurance Securities Association’s annual convention.

For some reason, he found the topic of interest, which surprised me, since his trip sounded a lot more fun than mine.  As the conversation progressed, he asked me to share the key points of my presentation.

Much of the material revolved around a study IBM conducted on wealthy investors.  This study, surveyed more than thirteen hundred affluent people (those with investable assets of $500,000 or more) asking 39 specific questions about their relationship with their wealth manager.  Using the data received from the survey, the authors placed the respondents into three distinct categories:  1) Advocates; 2) Apethetics; and 3) Antagonists.

They subsequently reported results by distribution channel, including banks.

Without getting too bogged down in the numbers, suffice it to say that the results for banks were alarming.  Twice as many investors viewed banks as Antagonists than they did the competition and only half, as few, were bank Advocates.

As I shared this information with Mr. Goldberg he began to open up.  I came to learn, Fred T. Goldberg was the former commissioner of the IRS under George Herbert Walker Bush and is now a prominent tax attorney with a large, esteemed law firm.

Mr. Goldberg went on to explain that he has five children at various stages of their lives and that his needs extended well beyond those of just he and his wife.  He explained how busy he was with balancing his very demanding career with his cherished family time.

At one point, he turned to me and said,  “Tom, I just want to turn the keys of my financial life over to someone I can trust.  Someone who will have my best interest in mind.”  He explained how he has a high level of personal proficiency in these areas, but would rather not be bothered with having to manage the minutia involved in effectively navigating his finances, now and into the future.

That certainly sounded like a reasonable request to me, so I asked him how he handled these matters currently.  He indicated he was working with a large “brand” bank (name withheld for confidentiality purposes).  I happen to know this bank very well and as coincident would have it, I actually know his private banker quite well.

I shared my opinion that his private banker was proficient, experienced, capable, and professional.  While he agreed with my assessment of her skill set, he also shared with me a cogent and serious observation.

He said, “I know she is capable, it’s just I get this uneasy feeling every time I have a meeting scheduled with my team.  For a while I had a hard time pinpointing what caused this discomfort, but I think it’s due to what goes on in these meetings.  It seems to me these ‘teammates’ don’t really like each other and each has their own agenda.  I really feel they are more concerned with meeting some goal or quota than putting my best interest first.”

Wow, you would have thought I was on a Southwest flight with the fuselage was ripping from the frame of the aircraft.  I could have used an oxygen mask, as I thought this dirty little secret remained behind closed doors.  Of course as insiders, we see the dysfunction of many institutions (always the competitors, never your bank), but figured this was pretty transparent to the client.

Yet, here was this wealthy, articulate man sharing his perspective of how his bank, in his opinion (which is absolutely what counts here) didn’t have his best interest in mind.

He shared that he and his partners make significant incomes, have substantial financial means and that they have one other common attribute – all are disappointed with their wealth managers. He said, he and his partners talk about this topic frequently and to their disbelief, none of the firms they deal with are truly making the grade.

As we began our descent, he said, “you know, if there is an organization that provides the kind of trusted advice I described to you, they could make a fortune working with my firm alone (we refer to this as affinity marketing).”

As we were deplaning, he asked me if I knew of any wealth managers he could contact fitting his profile.

Our mission, through our work with banks in wealth management is to have a long list of organizations, which could exceed the expectations of Mr. Goldberg and his partners.  It seems to us that Mr. Goldberg and his partners are exactly the type of clients most wealth managers are trying to attract.

While this serendipitous chat may seem highly anecdotal, it highlights for me that until banks present a unified, cohesive, objective, client-centric solution to Mr. Goldberg and his peers, they we will continue to receive suboptimal marks as highlighted by the IBM survey (and scores of others).  It is incumbent upon financial institutions to take an honest assessment of the client experience, which is much more difficult than it appears as most perceive themselves substantially different than do their clients.  Objectivity and tools for measurement of this are critical if you are to gauge where you are today and how much progress you are making toward delivering a consistently positive client experience .

So, if the reasons for turning your clients into Advocates is not clear yet, perhaps a quick understanding of some of the most basic benefits of advocacy might be helpful.

The IBM survey found that Advocates are four times as likely to consider their wealth manager as a trusted advisor, are 60 percent less sensitive to fees and are over two times as likely to bring you 80 percent or more share of wallet than their Antagonist counterparts.

The IBM study concluded, “We strongly believe that firms that create a compelling client experience can have an distinct and more sustainable competitive advantage.”  Who doesn’t want a distinct and sustainable competitive advantage?

And, now the rest of the story…

The study and my introduction to Mr. Goldberg happened before the financial meltdown.  Before Lehman, before Bear Stearns, before bailouts, before TARP, before banks went from being revered to reviled.  We argue today’s environment is substantially more challenging than that of early 2008 only increasing the importance of bank’s getting this right.

For those craving more statistics and solution driven information, please stayed tuned, as future posts will address these in detail.  We thought it critical, however, for you to meet Mr. Goldberg to ensure we stay focused on what is important; the client, and to acknowledge the gap between our perception and the clients’.