Downturn highlights breakdown in client communication

The recession has exposed a major breakdown in communication between clients and their wealth managers.

At last week’s Citywire Wealth Management forum, 80% of the 105 discretionary managers in attendance admitted the profession had not done enough to communicate with their clients during the downturn.

The results came hot on the heels of an annual report from management consultancy MDRC, which found managers did not live up to clients’ expectations of service delivery during the market collapse last autumn.

Graham Harvey (pictured) senior associate at Scorpio Partnership, believes firms have not got to grips with the correct language to use when communicating with clients.

He said that while firms tend to talk in complicated financial language, clients want to talk about goals, which underlines a fundamental need for the industry to engage more systematically with the individual.

Harvey told Citywire Wealth Manager: ‘Firms need to understand their client base and look at what is driving them. If the target-clients are entrepreneurs, for example, firms need to be specific about what that particular target audience wants.’

Michael Maslinski, founder of strategy and marketing firm Maslinski & Co, echoes this view, but is stronger in his criticism of the profession. He said: ‘Everyone knows that communication has been terribly poor and it is a gross failure of management that nothing has been done about it. People need to start thinking about their communication strategy, work out what they want to achieve, and do something about it. This issue needs to be taken seriously and it needs to be made a top priority.’

Kevin Doran, senior fund manager at Brown Shipley, admits there needs to be a re-think in the way clients are communicated with. He said that while communication has always been a top priority at Brown Shipley, clients have been overwhelmed by the amount of information they have been receiving.

He said: ‘A number of our clients have actually said they get too much information and they don’t want really weighty reports. This shows how important it is to get the balance right, as some clients want more information than others.

Harvey sees this as crucial. He said: ‘High net worth clients across the globe always have a view. Institutions need to know what this view is, how to effectively extract it at a strategic level, and how to implement it. This will dictate the next stage in the evolution of the wealth market.’

But Charles MacKinnon, founder of Thurleigh Investment Managers, said the client has to take some responsibility. He said: ‘The problem is, clients do not always open the envelope. It’s quite staggering how they refuse to pay attention sometimes. We can tell them but we can’t force them to communicate.’