Client segmentation - Advent Software

1 Client segmentation The secret to wealth management profitability WHITEPAPER. In this white paper, we examine why the flexibility to segment and serve customers is crucial in today's changing marketplace and how, with the right technology, segmentation can boost your firm's operational efficiency and profitability . Gaining insights Success will center on how well you can For example, one Client may want an identify your most profitable Client universe advisory-based relationship, and will customer segmentation enables firms to and provide high quality services to welcome frequent contact to discuss focus both their Client servicing and support them.

2 People have different needs investment ideas. Others with the same business development efforts more and expectations. That means having the level of assets may have little financial accurately and efficiently. flexibility to offer your target clients the acumen or desire to manage their customer segmentation is one of the keys right products and right information via the investments, and may prefer an arms- to wealth manager profitability . Proper right channels at the right time. Done well, length discretionary mandate. A Client 's segmentation allows for appropriately segmentation can help you gain the tax status, age and risk appetite can be of tailored service offerings and product insights you need into your business to vital importance, as they may determine development, producing more satisfied meet those demands, and maximize your whether certain investment vehicles are clients and helping boost revenue capture share of each Client 's wallet.

3 Suitable or not. and referrals. Unless clients are segmented in an In this digitalized, information-laden age, Dangers of the traditional appropriately granular way, wealth wealth management clients are ever more approach managers risk: demanding about the speed and While the level of segmentation detail is Failing to understand which clients personalization of service they receive. The improving across the industry, many are profitable or not, and what future tools and channels are there. Yet many wealth managers continue to classify and profitability potential they offer. wealth managers are failing to grasp the service clients according to traditional, opportunities.

4 Instead, they remain Devoting disproportionate amounts of limited methodologies usually by time and resources to unprofitable or wedded to outmoded processes that are grouping clients into buckets based on costing them time and money. low profitability clients . their assets under management held by Compromising relationships with clients the firm and the revenue they generate. The segmentation imperative by not providing the level of service or The groupings may then be used to offer types of products they want or need. Is your firm playing to its strengths? Do each segment a standardized menu of you truly know what those strengths are?

5 Products and services. Missing out on upselling and cross- As the wealth management industry selling opportunities by failing to offer This blanket approach is far too simplistic. customers relevant products and becomes increasingly competitive and Even where clients may appear alike from globalized, it is vital that firms can pinpoint solutions. a financial standpoint, behind the which Client types and asset mixes they numbers there can be huge disparities in are best equipped to support, and how risk profile, market knowledge, future they can maximize their competitive requirements and communication advantages and differentiators. preferences.

6 These variations call for a very different relationship tack. 2 | Client segmentation : The secret to wealth management profitability Success will center on how well you can identify your most profitable Client universe and provide high quality services to support them. The personal touch allied to Client -centric technology tools that sub-categories if they are to get the help advisors provide stand-out servicing right mix of cost effectiveness, service More than ever, wealth management and insightful investment guidance and personalization and flexibility. clients want and expect a greater level solutions, firms can better meet their of personalized services.

7 Why not, when clients ' evolving needs and wants and Metrics for better personalization has become so much a strengthen those all-important segmentation part of our everyday lives? It is already relationships1. highly developed in the retail industry, Both quantitative and qualitative factors where online shopping sites, play an important role in formulating a supermarkets, and consumer giants have A better way fit-for-purpose segmentation model that become adept at gathering and analyzing Thanks to today's information age and the can accurately capture each Client 's information on customer profiles, tide of regulation, wealth managers have current and potential value to your firm.

8 Behaviors and preferences to better access to far more data about their clients . Elements to consider include: understand their clients and forecast what For example, the various social networks products and services they may want. Total wealth offer opportunities for wealth managers to Fierce competition among wealth gain more information about their clients ' Classifying clients based solely on the management providers means firms must status and preferences, both professionally assets held by your firm does not give a work harder to keep clients satisfied. In and socially. Meanwhile, tighter suitability true picture of their actual wealth, revenue general, loyalty has been declining, with requirements and regulatory changes such potential, or service expectations.

9 High net worth individuals more mobile as the Foreign Account Tax Compliance Act Identifying their total wealth including (FATCA) mean wealth managers must assets held with other wealth managers, with their money, abetted by a flood of real estate, business investments, and information that makes it much easier to gather a lot more detailed information personal assets allows you to determine compare providers. Quality of investment during the on-boarding process, and the potential for acquiring additional advice and performance remain ensure they keep it regularly updated. assets and the resulting value that paramount. Increasingly, however, it is by Armed with this level of detail, wealth relationship could bring, and thus the providing the right type and level of managers can more effectively segment appropriate level of service to provide.

10 Services that firms will be able to their Client base. Inevitably, needs vary. differentiate their offering, justify the fees The level of segmentation and degree of they charge, and attract and retain clients . service personalization in part depends on Often it is the details that matter. The warm the firm's type of business and target glow of personalization could be triggered market. Specialist private banks or niche by anything from remembering a Client 's boutiques that cater to the ultra-high net birthday to getting tickets for their favorite worth segment, where each Client makes a sports team. In today's busy, highly larger contribution to the firm's overall competitive world, the small things can profitability , will be expected to provide 1 For more insights into the central role technol- make a big difference.