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Shy wealth firms overlook most basic way to win clients

Shy wealth firms overlook most basic way to win clients

Wealth managers are missing out on one of the easiest ways to win clients, according to a new study.

While very few of the world's rising wealthy are uncomfortable providing friends, family, or colleagues with referrals to a wealth manager, the majority of firms are missing out on this opportunity.

The Futurewealth Report 2014, composed by SEI, Scorpio Partnership and NPG Wealth Management, revealed advisers doubled their chances of receiving a referral by simply asking for one.

The study, which surveyed 3,025 individuals around the world with an average worth of $2.9 million, found that 47% would actively refer without being prompted, while an additional 47% would only refer if asked to do so.

However, it would seem wealth firms are on the whole rather unassuming, with only three in 10 of those surveyed saying they were asked for referrals by their wealth managers at least once a quarter.

The report found referrals are triggered by a complex blend of circumstances and financial behaviours, and are heavily influenced by a client’s age and geographic background.

Respondents from the West are more likely to recommend wealth managers if they demonstrate stability, good performance, personal service and integrity.

In the Americas nearly two-thirds (58%) of up-and-coming wealthy individuals would recommend a stable firm, followed closely by strong performance (54%).

The quality of the salesperson and 'periodic' contact and 'information about new products and services' at 15% and 14% respectively ranked as the most important element in a wealth manager's ability to deliver a great experience.

This suggests today's high net worths increasingly desire a strong relationship with their wealth advisers.   

With regards to age, the study found that the respondents under 40 referred the most clients if asked on a quarterly basis by wealth firms at 40%, while those over 60 referred the least at only 8%.  

'It’s well known that a referral is one of the strongest tools in an adviser’s marketing arsenal, and what we’ve learned is that there is no exact science to winning client referrals,' SEI chairman and chief executive Alfred West, Jr, said.  

'Client behaviour and confidence in advisors varies based on personality, age, and location, and, thus, is unpredictable. However, by taking action wealth managers increase their likelihood of organically growing their business.'

SEI senior vice president Ryan Hicke added: 'This finding should not be taken lightly. The relationship side of the business is ever-important, and managers must take the time to implement strategies that allow them to focus more heavily on personal interaction, without sacrificing quality.'

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