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Wealth management advisors must strike a balance between recognizing investment differences between men and women and avoiding stereotypes when courting female prospects.
July 9 -
Regional and community banks are carving out niches as asset managers by offering perks and personal services to affluent customers whom bigger rivals often overlook.
October 11 -
Many banks are joining the crowded field of companies targeting the investment savings of the so-called mass affluent.
May 10
Banks keen on offering wealth management services should heed the advice from hockey legend Wayne Gretzky move to where customers are going to be, not where they have been.
Developments in technology and a generational shift are partly responsible for driving such changes, industry experts said. Smaller banks that want to compete must pay close attention and adapt if they want to stay relevant.
More customers are questioning the need for a wealth manager, said Kathleen Burns Kingsbury, a wealth psychology expert and founder of KBK Wealth Connection. "That's where helping them to understand that really good wealth managers allow you to think about your vision for the future and the things you need to get there," she said.
Community banks have a natural advantage over other wealth management firms, industry observers said. Smaller institutions are often skilled at building customer relationships, a key ingredient to a strong wealth management department. Community banks also do a good job building a reputation for being trustworthy.
Still, small banks have fallen behind in setting up the technology customers expect and want from wealth managers, industry observers warned. Customers may want access to forecasts and online modeling. The may also want see statements more frequently than once a month.
"Gen X and Gen Y are expecting different service interactions and the marketing and communication and branding are totally different," said Robert McGraw, a partner in the financial advisory practice at KPMG. "They want access to a good product and advice, but in a cost-effective way and with much more technology, along with a high-touch model."
New technology has allowed firms that may not have a brick-and-mortar presence to enter the wealth management field, McGraw said. Companies such as Wealthfront, an online investment service that has hit $1 billion of assets under management in less than three years, should be taken seriously, said JP Nicols, chief executive of research firm Clientific. Other formidable technology driven wealth managers include Personal Capital and Betterment.
For younger customers, who complete more transactions online or through mobile devices, these digital formats can be more appealing than having to meet with a financial advisor in an office.
Younger customers "are digital natives," Nicols said. "They live their whole lives digitally, and the thought of seeing a wealth manager in an office with paper statements is a major disconnect."
Customers also have greater access to information than ever before, and they want to be more involved in their financial planning. When Susan Martore-Baker, president of Cambridge Trust Co. of New Hampshire, started her career in 1979, "it was easy to be dictatorial in providing trust services," she said. That isn't the case anymore "because there are so many options and clients will go where they are comfortable," she said.
Cambridge Trust, a unit of the $1.5 billion-asset Cambridge Bancorp in Massachusetts, has been able to adapt to changing customer expectations because it is a small operation, Martore-Baker said. The company, which outsources the development of its online resources, has its "roots in Cambridge across from Harvard," forcing it to be on the forefront of technology.
Wealth managers at Cambridge Trust have continuous training and frequently attend educational programs so they can better serve clients, Martore-Baker said.
"We certainly have older clients who are technologically astute and our younger clients want Internet access to account information and modeling," Martore-Baker said. "That is almost a given with new clients. We've certainly had to adapt."
The American Bankers Association recently overhauled its online wealth management and trust training courses to better meet the needs of bankers, said Maryann Johnson, senior vice president of market management at the trade group.
The training, broken into more than 40 courses that are less than an hour each, focuses on technical skills that bankers will need. It also looks at how bankers can discuss options with their clients, Johnson said.
Technical skills get a lot of the attention, but an ability to connect with clients has become increasingly more important as younger customers tend to trust financial institutions less, industry observers said. Also, clients who view their adviser as empathetic and interested in understanding what they want are nearly four times as likely to stay with an adviser and almost 10 times as likely to cooperate with recommendations, Kingsbury said.
"The younger generations don't have that sense of loyalty but are attracted to a solution that works for them," Johnson said.
The American Bankers Association had also heard from its advisory board that there was an impending shortage of wealth managers as current bankers age and retire, increasing the importance of training, Johnson said. This changing of the guard opens up opportunity for banks to hire younger, more diversified talent, which could also help attract younger customers.
"Some institutions are arrogant and think their logos will be sufficient to bring in customers," said Rod Taylor, chief executive of executive search firm Taylor & Co. "They think that whoever we have will gain access to the wealthy because our institution has such a grand image. But that isn't true of everyone and
