Connecting and influencing - What can we learn from the USA?

Expert: Vincent Tiseo, Managing Director, Business Strategy, Goldman Sachs Asset Management

Facilitator: Martyn Laverick, Phase 2 Consulting

Session summary:

The conversation started off being centred around changes in the USA and the fact is that there was a significant flow of money between advisory services.

Individuals were looking to move services where they had outgrown their current adviser. This listed a range of services that were currently being offered by a variety of advisory businesses in the USA. The roundtable audience was then asked for their views on new services being offered.

Overwhelmingly the response was based around new services to deal with ESG as this was being driven by regulatory requirements rather than necessarily enhancing the services offered to clients based on client feedback. Certain individuals volunteered some ways they had been helping clients during the first lock down and there were some noticeable examples that impressed.

One firm had set up an educational hub to allow clients to access, as well as their families to access, information around financial services. In addition, one business has gone beyond and above the call of duty by offering services that help clients buy produce etc at a cheaper price than they could get in supermarkets. There were further examples and this highlighted that some of the soft services that were offered to clients of wealth management firms were highly regarded and valued by clients.

This is also considered to be a good way of bringing in family and potentially friends to a business where the educational hub was deemed to add value.

This highlighted what Vincent was explaining: that clients look for an experience when dealing with a wealth management firm rather than just advice and guidance. Naturally advice and guidance sit at the core of what businesses do but clients now want something more above and beyond this.

Given how much has changed during COVID-19, surveys of clients revealed that 59% of high-net-worth investors were now comfortable with virtual meetings. However, this does not get away from the point that many firms and clients, when asked, would like to get back to face-to-face meetings as well.

It was interesting to see that, when questioned, 87% of the roundtable participants stated they would be looking to launch new services over the next 0 to 24 months.

One of the key areas discussed was around intergenerational wealth transfer and how this could be done in a way that engaged the Next Generation. Some of the roundtable participants explained that they had already started having Family meetings to try to get the Next Generation engaged with financial planning. This is often harder than it appears, especially in the UK, as many people feel uncomfortable about talking about money as a family. However, COVID-19 has actually made people address their own mortality and this has helped families start these discussions.

The majority of firms within the roundtable are still very much focused on the core activities of wealth management. But there were examples of businesses that had emerged from accountancy backgrounds and these businesses offered fully integrated wealth management, accountancy and legal advice propositions. The direction of travel in the United States is more akin to this example and it will be interesting to see how this starts to play out in the UK.

One question asked of the roundtable participants was for their Wish List looking forward to 2021. One of the overarching themes to come out was that of open banking and feeding into the existing technology of IFA practices. This was seen as an enabler to allow firms to offer further integrated services and to help develop multichannel propositions.

The offering from the USA from many wealth management firms is a comprehensive one, encapsulating many services and not just the traditional wealth management services to provide their clients with an enhanced experience. Whilst there were examples of this within the roundtable group, it is clear most firms are currently focusing on what they do well and the regulatory pressures around areas such as ESG.

One of the key areas that most firms expressed an interest in exploring further was around intergenerational planning, how to engage with the beneficiaries, and what services they will need to offer going forward to retain these clients and their fans.