All but the simplest of business exchanges require a degree of trust. The further we move from face-to-face product-based transactions, the more trust is required.
In financial services, trust is absolutely key. In order to explore trust levels among the wealthy population and find out what providers could do better, Ledbury Research recently interviewed 500 UK high-net-worth individuals (HNWIs).
The good news for the wealth management industry is that a little over 80 per cent of HNWIs currently trust their institutions to a greater or lesser degree.
More broadly, the 2013 Edelman Trust Barometer suggests that the general public’s global level of trust in the financial services industry is presently 50 per cent.
But when you think about the sums of money involved for HNWIs and the transition from transaction to fee-based payment, we would argue that 80 per cent is still too low.
And for those wealth managers who need persuading that trust is a key performance indicator worth chasing, our research has shown that higher levels of trust and higher share of wallet go hand in hand.
Two of the most important service elements in building trust are communication and proactivity
The fact that HNWIs’ trust levels have stayed static over the past four years is also disappointing, particularly when you consider the efforts made by several providers to improve matters.
The past few years have seen radical reinventions by wealth managers, including the separation of wealth-management arms from asset management, and ambitious advertising campaigns aimed at winning back trust.
While these may have helped the individual companies, they have done nothing for the overall trust levels among the high-net-worth population. This suggests that providers are failing to deliver in the areas that actually matter to clients.
In its Trust Trend report, Ledbury analysed what providers need to do to regain the trust of HNWIs. The research found there are a number of fundamental service elements that are very important in building trust. Two of the most important elements are communication and proactivity.
“They have not phoned me once to catch up or discuss my portfolio,” said one high-net-worth male, aged 55-64.
Communication is a key driver of trust which currently receives low satisfaction scores. Being there when needed and responding quickly to any requests are maintenance areas to prioritise, but matters will not improve unless advisers begin to reach out more.
Not every client requires a constant running commentary, but how much trust could you really be expected to give someone you only speak to annually?
“They allowed a savings account to continue at a very low rate when better rates were available. I had to pursue them; they were not proactive with me. I closed the account and moved to another bank,” said another high-net-worth male, aged 65-plus.
In a market where competent advisers are not scarce and where HNWIs are generally serviced by more than one, providers should be aware that standing still is not an option.
Clients who entrust wealth to their providers are giving them control over more than just their money, but also their future choices. Proactive behaviour demonstrates that providers take that responsibility seriously.
These elements are very much within the control of wealth managers and, if they can be successfully addressed, then wealth managers can individually and collectively make a real impact on HNWIs’ trust levels.