The crisis has shone a harsh light on the performance of some wealth managers, and not just in an investment returns sense. Disappointed clients are flocking to find leading firms in readiness for the dark economic days ahead. Here’s why.
These past few months have been our busiest period since launching in 2012. Enquiries from dissatisfied clients were already up a third from their normal levels and our recent broadsheet coverage has encouraged record numbers to get in touch. We’re delighted to see so many people proactively seeking better wealth management relationships – and that technology has allowed us to keep arranging them seamlessly throughout the crisis.
COVID has clearly proven a crunch point for many people and they’ve seized the opportunity lockdown has offered to consider their options. So, what is causing so many clients to be on the move?
Clients have naturally accepted that this unprecedented pandemic will have hit their portfolios along with everything else; what they can’t tolerate are the deeper failings the crisis has so often exposed
It would be easy to think that poor investment performance is the root cause, but while that is a factor, the picture is actually far more nuanced. Clients have naturally accepted that this unprecedented pandemic will have hit their portfolios along with everything else; what they can’t tolerate are the deeper failings the crisis has so often exposed.
Here is a sample of what clients have been telling us.
Mismatches on risk
One area of huge consternation are perceived mismatches between clients’ tolerance and appetite for risk versus their actual exposure through portfolios. The bedrock of an effective wealth management plan is correctly assessing an individual’s risk-profile (how much investment risk they can afford, want and need to take on to achieve their goals). Lots of people feel they’ve been misunderstood here.
Some admit they thought they had a far higher appetite for risk than they actually do, and feel that advisers should have probed harder to discover their true attitude and capacity – before the wild gyrations of the markets did that for them
Procedures may well have been followed to the letter and clever tools used, yet many clients say there must have been something missing from the process to end up so far off base. Some admit they thought they had a far higher appetite for risk than they actually do, and feel that advisers should have probed harder to discover their true attitude and capacity – before the wild gyrations of the markets did that for them.
Education and transparency lacking
Relatedly, we’re hearing from many investors who – while they may not have been technically “mis-sold” investments – feel that they’ve been nudged into things that didn’t match their requirements. Labels have been crucial here, with some investors gobsmacked to learn that their “conservative” portfolios in fact had hefty weightings towards volatile investments like equities.
Leading wealth managers put great effort into giving their clients a good grounding on issues like risk and volatility, and in particular what proposed investments represent for their situation and goals
Leading wealth managers put great effort into giving their clients a good grounding on issues like risk and volatility, and in particular what proposed investments represent for their situation and goals. Others, it seems, have approached this as more of a tick-box exercise and are now experiencing a severe backlash.
Top Tip
Delaying the change of your wealth manager when you are not happy with the service being offered could be causing you to miss out on valuable wealth growth opportunities. We can help you find a much more satisfactory arrangement in no time at all, and with no cost to you, using our matching service.
Lee Goggin
Co-Founder
Sub-par performance and proactivity
Although we have all been through a “black swan” event, a great gap has emerged between the performance winners and losers during the first half of the year. As we recently showcased, the best firms have been fighting back vigorously – and positioning for growth – while others have been running scared. Benchmark comparisons are making the difference all too stark.
Some have been amazed to learn that they did not benefit as much as others from last year’s bull market and yet have still been hit by all of this year’s downside. Having seen neither strong returns nor increased safety is naturally making them wonder what they’ve been paying for
But these concerns are also causing clients to shine a light on previous performance too. Some have been amazed to learn that they did not benefit as much as others from last year’s bull market and yet have still been hit by all of this year’s downside. Having seen neither strong returns nor increased safety is naturally making them wonder what they’ve been paying for.
Feeling ignored and taken for granted
As we have highlighted, a chasm has also opened up between the good and poor communicators through all this. Making full use of technology – as well as frequently picking up the phone – leading firms have pulled out all the stops to reassure clients and inform them of all the ways their wealth is being proactively protected. Others have felt virtually ignored, or what is little better, bombarded with generic commentaries.
Making full use of technology – as well as frequently picking up the phone – leading firms have pulled out all the stops to reassure clients and inform them of all the ways their wealth is being proactively protected
More profoundly, it has become crystal clear to many clients just how little time their adviser has for them as an individual – simply because some firms assign so many investors to each one. The good times provided a lot of cover for this. Now everyone is clamouring for individual attention at the same time, the wheels have come off at firms that focus on profitability to the exclusion of client service.
A crystallisation of concerns
Many of the affluent individuals we have been speaking to feel completely blindsided by the revelations brought about by the crisis. For our part, we’ve been shocked by the number of times clients confess the past few months have simply confirmed fears they’ve been harbouring for years: that they’re not getting the performance, service or value for money they signed up for and they should have taken action long ago.
Many of these clients seem to feel a little ashamed they’ve let an unsatisfactory relationship – which has been costing them so much – drag on. They should not blame themselves. There are so many myths about it being arduous or expensive to move, which is why we explode them frequently on our site and through the press.
We’ve been shocked by the number of times clients confess the past few months have simply confirmed fears they’ve been harbouring for years
Rest assured, we can help you find a much more satisfactory arrangement in no time at all, and with no cost to you from using our matching service. To disappointed clients, we say: you have nothing to lose and potentially a lot to gain. Join those striking out for something better. It’s what you and your money deserve.
