Understanding transparency to rebuild client confidence
Transparency is a key element in the relationship between clients and wealth managers, however both sides have very different ideas as to what changes need to be made in the industry, writes Bill Yelverton.
Trust, specifically rebuilding trust, is a phrase the industry has been throwing around boardrooms for some time. Our interest in the concept over recent months has been to deconstruct the notion of trust into component elements for the purpose of business planning.
To do this we spoke to a selection of high net worth clients and a group of industry executives in the UK to get their understanding and experiences of this issue. The analysis below focuses on transparency as one element of the trust dynamic.
Deconstructing transparency raised interesting dualities between client and industry perspectives. Indeed, unlike in previous crises, the banks’ creditability and stability took centre-stage in the recent maelstrom.
These doubts have shifted the meaning of transparency for both clients and wealth managers.
However, each side has a different idea as to what changes need to be made, and what clients want, compared to what they are getting, are very different things. It is interesting that each side believes they are being clear in their view, but clearly there is a disconnect between the two sides.
In short, clients say the industry is not transparent. On the other hand, the industry believes transparency is key to rebuilding client confidence, and by regaining assets it has proved its delivery.
Either clients are not listening, or the wealth industry is not saying the right things. We suspect it is more of the latter than the former, given the disparity between providers and consumers.
Whichever way you look at it, clients’ perspectives on adviser transparency do not paint a pretty picture. Wealth managers are going to have to spend more time and attention providing the context the clients demand, in order to keep the relationships alive, let alone grow them. This investment of time and energy, as well as systems and support, will certainly have an impact on margins.
Bill Yelverton is an executive director at wealth management strategy think-tank Scorpio Partnership.
