Practical analysis for investment professionals
24 January 2018

2018 Outlook for US Wealth Management: “The Year of the Client”

Google the phrase “client centric wealth management” (no hyphen) and you’ll be rewarded with hundreds of thousands of results. After all, the client is always at the center of the relationship between financial advisers and their investment portfolio, and wealth management firms focus on clients’ needs. Right?

Apparently not.

In a recent report, Scorpio Partnership struck at the heart of what it says is lacking in the wealth management industry: the client experience, or as one executive put it, placing “the customer at the heart” of the service experience.

“Wealth management should absolutely be built around client needs,” the report said. “Given the intimacy of the client/advisor relationship it may be hard to believe that it isn’t already, but the truth is that while many firms invest in listening to their clients, few put what they learn to work delighting customers day-in-day-out.”

As 2018 gets underway, we asked April Rudin, founder and president of The Rudin Group, about this disconnect between clients and firms; the “new” client experience; and why she believes 2018 will be the “Year of the Client.”

Below is a lightly edited transcript of the conversation.

CFA Institute: I’m a little surprised that it’s 2018 and we find ourselves still talking about the importance of the client experience. What have you observed over the past year that makes you think this is an area that needs attention?

April Rudin: Over the past year, I have noticed that while many wealth managers, and other financial services executives, are high-end consumers who value the client experience offered by luxury brands, for example, they struggle with translating that same experience to their own client offerings. For many firms and advisers, it means doing a 180 to see things from the clients’ perspective and how they value services, offerings, and even client communication. Something else I have seen is that some people who are using their smartphones and a variety of apps in their personal lives are reluctant or slow to adopt technology in their professional lives.

With $32 trillion (estimated) in the wealth transfer clearly underway, women and the next generation are reshaping the client experience. They value being treated and understood as individuals, yet much of wealth management remains in the “one-size-fits-all” mentality. Reconciling what clients want with what firms are offering will be the single most important area for the wealth management industry to focus on in 2018 and beyond.

The good news is that firms that get this right stand to have the greatest advantage in 2018 and beyond to grow assets under management (AUM) and gather new assets. And by the way, it’s iterative; not “one and done” — there is no single action or magic bullet. It must be an ongoing effort.

It is key for firms and advisers to keep their online/digital best foot forward. And on all channels. Today’s global investors are online and connected. They want their advisers to be as well.

You raise a good point about wealth managers being high-end consumers who are serving other high-end consumers — their clients. Firms need to better reflect the clients they serve. After all, this is key to the client experience. 

Are you seeing any signs of more diversity among wealth managers? If not, why should this be top of mind from a client experience perspective?

I recently attended the 23rd annual Raymond James’ Women’s Symposium and learned that while 50% of client households are run by women, only 15% of financial advisers are women. This is a clear disconnect that needs to be remedied. There are more women entrepreneurs than ever before — these potential clients are creating their own wealth and have their own ideas of how and why to connect with a wealth manager. Some may prefer men, others prefer women, but clearly the choices are not there.

The statistic for women who inherit wealth is startling: Conventional wisdom holds that 70% of widows fire their financial adviser within a year. And we know why: either there was a minimal or no relationship with the spouse and they simply want to start fresh with someone of their own choosing. [Editor’s note: Some dispute that women clients lack loyalty to their advisers.]

I firmly agree that firms need to better reflect their clients on the gender and age front. More women and millennials need to be represented in the wealth management industry and in financial services in general.

However, I would caution that there is also a risk of “oversegmentation” in thinking about client acquisition. Not all women want female advisers. Likewise, not all millennials prefer robo-advisers. Even my own millennial son texted me from his first visit to a financial adviser who tried to send him to sign-up for a robo-adviser by saying, “You are a millennial. You should use a robo.” My son lamented that he knew nothing about investments, and that was why he went to a human adviser!

Attracting more women and people from historically underrepresented populations is also a practice management issue. There’s a looming talent gap. According to EY, the average age of a financial adviser is now 50 and continues to rise every year.

There are some initiatives, such as Envestnet Institute on Campus, that have sprung up to bring greater awareness on college campuses about wealth management careers. However, it’s an uphill climb. Many millennials are disenfranchised by Wall Street, having witnessed what their parents went through during the 2008 financial crisis, and seen many of the negative stereotypes perpetuated in films and news media.

On the other hand, there are growing numbers of initiatives aimed at bringing more gender diversity into wealth management. It turns out that working as a wealth manager can be a very portable, durable, flexible career for women.

Aside from human talent to fill the gap, there will be advancements in technology to help solve the gap and meet a changing desire of client experience for wealth management services. And this is multi-generational. Robo-advisers, or self-service digital sites, will be applicable to some portion of the population as stand-alone offerings, and family office practices and other wealth management firms will integrate some self-service offerings as part of their hybrid offering (for more on this, see “Capgemini World Wealth Report 2017“).

Many wealth managers have no succession plans, leaving themselves and their own clients in jeopardy. There is an opportunity for baby boomers to pair up with millennials or Gen-X to form multi-generational wealth management firms. And the same, opportunity exists for creating greater diversity within the “white male” firms — bringing in more diverse advisers can help attract a more diverse group of clients.

It seems to be that there is an enormous opportunity for firms to cultivate more diverse teams to better serve this changing client demographic. Women advisers can also tap into a variety of new market opportunities, ranging from divorcing women to younger investors.

I mentioned above the opportunity for women, NextGens, and others representing a more diverse racial base to join existing wealth management firms (incumbents) or forming their own “start-up” wealth management firms. These multi-generational and gender diverse firms would be better positioned to attract new investors who have changing expectations from their advisers. Wealth is no longer a “white males”-only lane — wealth is increasingly held by other groups. This has occurred due to the wealth transfer to the next generation, women outliving men, and NexGen and others going the entrepreneurial route and generating wealth at much younger ages than ever before.

Something we should also discuss is the concept of “niche” wealth management practices as new market opportunities. Divorced women or female-only practices have become popular as advisers try to break away from the “herding effect,” which has been prevalent.

While I can understand and appreciate the desire to form niche-y advisory practices, it seems to me that this way of breaking down client segments might not be the most effective. In other words, would you imagine a “male-only” wealth management firm? Or why only millennial when many boomers might want a digital-based client experience?

I think that we will find 2018 showing different types of client segments unfolding where people will aggregate into groups based on other shared values such as impact investments in water or cryptocurrency or biotech or any of the many emerging investment and research ideas that might be better ways of creating client segments and meeting the needs of the new diverse base of emerging investors.

Switching gears slightly, we hear a lot these days about firm culture. We know it plays a crucial role in shaping behavior in organizations. But great company culture doesn’t happen on its own. When you consult with firms, what advice do you offer to help them build a client-oriented culture? 

My best advice to wealth management firms for creating and recreating/iterating a client-oriented culture is to remember to encourage more asking instead of telling. That asking may include surveying clients either formally or informally, debriefing your own client-facing team members, and talking to other similar service providers who serve like-minded clients.

Offering clients, prospects, and centers of influence/referrers a dialogue (instead of a monologue) in your interactions can help ensure more closely aligned client experience and service delivery. Some ways to create that dialogue include surveys, focus groups, events (both online and offline), community building, and opportunities to create networks and build value in ways outside of investment advice will be the key to building your business now and positioning it for further growth.

Wealth management can be the most trusted and valued professional relationship for ultra-high net worth and high net worth clients. But, clients/prospects must understand the unique value props of your firm — both your technical skills and soft skills. Your firm’s culture is now more important to your clients than your rate of return last year. Culture is about establishing long-term relationships that align.

Establishing a client-centric environment within your firm and properly communicating your firm’s culture, value props, and differentiators can attract clients, prospects, and new talent that is a better fit.

Even for firms that make the decision to differentiate their value proposition, cutting through the noise to convey that in a helpful and compelling way doesn’t seem like it is getting any easier. What sorts of innovations are you seeing on the marketing front?”

This is certainly the next frontier for wealth management firms that have evolved beyond the standard marketing efforts — how to separate the signal from the noise? The industry standard says that people must see a brand at least seven times before they will interact with it.

For wealth management firms, this becomes a greater challenge as it is opportunistic when investors might be looking to change or add a new wealth manager.

Innovation on the marketing front has largely been through new platforms, such as social media, and digital marketing capabilities to automate routine functions and help distribute content to a more targeted audience.

Also, there is now technology that will allow you to comb through the internet-using machine-based learning/artificial intelligence for wealth events or “money in motion.” This can better time outreach from advisers to prospects.

Additionally, I highly recommend that wealth managers market to COIs (centers of influence) who can be an even greater source or referrals beyond one client — like a force multiplier. One relationship with one COI can yield multiple referrals of clients. They are also better-timed referrals as in when they are in the market for a new adviser. COIs can also provide background information on their clients to advisers so that they have a leg up in understanding a prospect’s wants, needs, personality, and situation.

Clients have a lot of options when it comes to choosing an adviser. With increasing competition, wealth management firms need to differentiate their services beyond investment performance. How do firms distinguish themselves from each other when it comes to their value proposition?

Typically, financial services and wealth management firms have suffered from the “herding effect” — very few stand out. Just as advisers reject the “do-it-yourself” investor mentality seeking to establish the benefit of professional advice so they must resist the urge to do their own marketing. Establishing/communicating the right value proposition for your firm and individual expertise within your firm will help you stand out to the proper prospects and reinforce your position with existing clients. Also, it will attract clients who are a proper fit thereby diminishing the risk of onboarding clients for whom your firm is not well suited. A lot of time, energy, and resources can be consumed by clients who are not a good match.

Professional marketing firms can help you establish the areas of expertise that set your firm apart. Equally important can be communicating the firm or individual adviser’s passions in order to attract like-minded clients.

There are so many articles about the future of wealth management and “the machine,” including robo-advisers, artificial intelligence (AI), machine learning, etc. How should a wealth management firm think about using fintech as a differentiator?

Wealth management firms can think about fintech in several ways. First, how can fintech tools free up advisers from mundane and routine tasks? Second, how can fintech be used for investments and trading efficiency and efficacy? Third, what type of functionality can I offer clients to choose from to help provide the client experience that they desire most? And lastly, how can I leverage the sum of these parts to provide expert investment advice, financial planning, and informed decision making to improve their financial life?

In general, each of these technologies should be considered by wealth management firms that wish to be well positioned for future growth. There is a generalized feeling that robo-advisers and artificial intelligence will disintermediate the value and function of wealth management and this has prompted a lot of fear in the industry.

Instead, I would propose viewing technology as a revenue generator instead of as an expense to properly see the value of this type of investment in your firm.

We’re looking out at a new year, what are you most excited about for 2018?

I am most excited about the acceleration of the rate of change from talk to action in wealth management over the past year. I remain very excited for 2018 to truly be the “Year of the Client” for wealth management firms. Firms are beginning to see that they must provide a variety of client experiences to attract and engage with a variety of investors. Every single client wants to be understood and serviced in a customized fashion instead of the “one-size-fits-all” service models of the past.

I see more action, and more funding for projects to use digital technology for client communications, portfolio management, financial planning, personal finance applications, and education. Clients’ wants and needs are fueling the pipeline of projects and pushing ideas into deployment much more quickly than in the past. Even venture capital and private equity firms’ innovation labs are funding and implementing more far-reaching projects — more so than I have seen over the past decade.

So, as I see it, when the client fuels change, that calls for 2018 to be the “Year of the Client” and for wealth managers to be ready to take advantage of this trend.

How should wealth managers position their firms for success in the year ahead? Scorpio Research recently concluded its survey of Wealth Management firm Chief Marketing Officers (CMO) in the Americas and Europe to discern trends and priorities in the coming year. On Wednesday, 31 January 2018 from 11 am to 12 pm EST, David Lo, associate partner at Scorpio Research, and April Rudin, president of The Rudin Group, will discuss the survey’s findings, the implications for wealth management firm marketing strategy, and what wealth managers can learn from CMO insights to apply to their own practices in the coming year. For CFA charterholders, the webinar qualifies for CE credit.

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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

Image credit: ©Getty Images/fandijki

About the Author(s)
Lauren Foster

Lauren Foster was a content director on the professional learning team at CFA Institute and host of the Take 15 Podcast. She is the former managing editor of Enterprising Investor and co-lead of CFA Institute’s Women in Investment Management initiative. Lauren spent nearly a decade on staff at the Financial Times as a reporter and editor based in the New York bureau, followed by freelance writing for Barron’s and the FT. Lauren holds a BA in political science from the University of Cape Town, and an MS in journalism from Columbia University.

April J. Rudin

Founder and CEO of The Rudin Group, April J. Rudin is widely acknowledged as a top marketing strategist for the U/HNW, wealth-management and wealthtech sectors. Distinguished by her ability to forecast and leverage critical trends and her expertise in brand differentiation, she leads a firm, now in its 15th year, that designs bespoke marketing campaigns for some of the world's leading wealth-management firms, fintechs/wealthtechs, and family offices; campaigns that strengthen brand value and drive client acquisition. Rudin is recognized by IBM as an "Influencer" in wealth management and fintech, and is a regularly featured source of expert commentary to international news and business outlets, trade publications, and broadcast media. She produces the CFA Institute’s Annual Outlook for US Wealth Management; and speaks about wealth, next-gen, and fintech at conferences in the United States, Europe, Asia, and Africa. Rudin has created an extensive repertoire of thought leadership that has appeared in Forbes, Huffington Post, American Banker, Enterprising Investor, Family Wealth Report, Fundfire, and, and heads the editorial board for NexChange, a global fintech start-up based in Hong Kong. A member of Board for First Rate,and WealthBriefing, she also serves as a judge for the FT Wealthtech awards, Family Wealth Report’s Annual Wealth Management Industry Awards, Finovate and others. Rudin is the mother of two sons who are quick to point out that they considered her an influencer well before IBM did.

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