Battle of the brands: why wealth management is getting a new look
With the wealth management industry becoming increasingly competitive, brand has become more important than ever in the struggle to attract and retain clients
Here is a bold prediction: wealth managers are gearing up for what will be the era of greatest expenditure on brand campaigns in the history of the sector.
We have been saying for some time that brand is paramount in high net worth client engagement. Back in 2012, our Futurewealth research proved it was the single most important part of the wealth management customer journey. Four years later, a perfect storm of factors is bringing brand back to the top of the strategic agenda. Let us take a closer look.
Drive for differentiation
The wealth sector is growing increasingly competitive, not necessarily due to an influx of new entrants but an influx of more visible entrants. Potential clients are now being targeted by tailored advertisements. Our research proves this is an effective strategy. A recent study we conducted in the UK found one in five clients recall seeing an advertisement for a wealth manager.
Until very recently, wealth management brand changes were guerrilla efforts; subtle alterations to corporate messaging that only the most attentive of clients would notice. But with firms increasingly needing to stand out from the competition, many have started to be more explicit about brand changes. A notable example was UBS’ heavily publicised launch of their new brand campaign launch with photographer Annie Leibovitz last year.
Faltering environment
Assets under management at the top 25 private banks are falling despite a significant increase in net new assets, showing heavy reliance on new client acquisitions to sustain corporate balance sheets.
To attract new clients, wealth management firms are allocating significant budget to brand enhancement. A brand valuation study by PWM’s sister publication The Banker earlier this year shows that, despite decreases of some overall brand values, the financial baseline value of a top 10 wealth manager brand has increased more than double since 2015. A new standard of brand quality is being set as wealth managers move closer to brand benchmarks set in retail industries.
Measuring engagement
Client sentiment towards wealth management brands has been traditionally overlooked in favour of singular standard metrics such as measurements of trust, satisfaction and NPS (net promoter score).
However, as we continue to map and unravel the formula behind client engagement, our results show brand is a key component in driving revenue for a wealth manager.
It appears those most experienced at measuring client engagement recognise this. Our Client Insights Tracker shows that in Europe less than 10 points separate the top brands but in North America, where client engagement measurement programmes are more commonplace, brand value is slightly higher.
The Insights Tracker also shows that the recent shift in focus towards brand is having tangible results on client engagement. Between 2015 and 2016 there was a significant increase in end-client perception on wealth management brand value.
The world’s leading wealth managers are already moving to improve brand and the rest will soon follow. Expect brand campaigns launched by wealth managers to escalate over the next 18 months as firms move to clarify and communicate their principles and values in order to attract prospects and deepen relationships with existing clients.
Alex Johnson is senior manager at wealth management think-tank Scorpio Partnership
