There is more to wealth management than just the performance of an investment. Clients have a tendency to partner with their financial advisors for many years (even decades). They depend on their financial advisors when planning for retirement, preserving wealth, creating an appropriate estate plan/strategy, as well as achieving long-term financial goals. Trust and confidence in their advisor are paramount in establishing a mutually rewarding advisor-client relationship.
Public awareness of the importance of maintaining the security of the financial services industry's customer personal information has become particularly highlighted as a result of news reports focused on the recent KerberRose Wealth Management data breach investigation, which illustrates that every instance of cybersecurity incidents is different, but they also encourage discussions at large about trust, transparency, and information security in the wealth management community.
In many business relationships outside of wealth management, there is no need for clients to disclose their most sensitive personal or financial information; however, in wealth management, clients must provide their advisors with their most sensitive personal and financial data (such as account details, retirement planning documentation, tax records, beneficiary information, and long-term financial goals) in order for the advisor to make recommendations that best suit each client.
The Foundation of Client Relationships
Trust is often built upon ongoing contact, along with professional knowledge and a proven track record of acting in a way that is best for the client.
Clients will often consider the following characteristics when evaluating their financial advisor:
Length of time in the business
Timeliness of responses to inquiries
Level of transparency with clients
Reliability of service
Level of security provided
Quality of long-term relationship management
Although the performance of investments will always be important, many clients attach equal weight to their own confidence and peace of mind when selecting a financial advisor.
Why Information Security is Important
Organizations that offer financial services maintain vast quantities of sensitive information on a continual basis. This information commonly consists of client personal identification numbers, payment accounts, and the various documents needed to perform adequate financial planning services for each client.
As digital tools are used more for providing wealth management services, these firms will increasingly utilize the following items:
Web-based client portals
Secure methods of document sharing
Digital methods of managing accounts
Electronic communication devices
Cloud-based solutions
While these tools provide convenience and efficiency, they also reinforce the need for effective cyber security methods and responsible management of all data stored by the organization for clients.
Transparency Builds Confidence
One of the best methods that financial companies can enhance client trust is with transparency. Clients tend to prefer firms that have clear explanations of their policies, procedures, and expectations for how they handle their private information.
Examples of what transparency is:
- Clear privacy statements
- Regular client communications
- Security awareness education
- Account updates provided in a timely fashion
- Quality customer service
When an organization is open in communicating with their clients, the clients will usually feel more confident in the services provided to them.
The Importance of Long-Term Relationships
Wealth management, unlike many types of financial products, tends to be relationship based. Clients who work with the same advisor will frequently go through several different stages of their lives, such as when they get a promotion, prepare for retirement, transition to a family, and begin their estate preparations.
Long-term relationships depend on constant professionalism, dependability, and trust. A financial advisor that places an emphasis on client service and performs well in managing private information will typically be able to develop and maintain strong long-term relationships with their clients.
Looking Ahead
The wealth management sector is going through significant changes due to the combination of technological innovation transforming the delivery of financial services. The industry has seen an influx of digital platforms, online access to accounts, and remote consultations becoming standard practice.
With these technological enhancements evolving and being offered to clients, it is anticipated that the client’s expectation of transparency, security, and accountability will increase. Financial services companies that can deliver technological access to their clients while providing appropriate levels of client protection will increase the likelihood of earning the client’s trust and retaining that trust over time.
Trust is truly one of the greatest assets within the wealth management space. While investment approaches or market conditions can fluctuate over time, maintaining a high level of client confidence is fundamental to establishing solid, long-term financial relationships between clients and the financial professionals that serve them.
