Wealth Management Firms Derisk Customer Relationships

Wealth management firms traditionally focus on manufacturing investment products and leave relationship management to advisors, according to Forrester. However, this model leads to risks such as advisor departures, competitive poaching, and advisor ageing, which can result in the loss of client relationships and assets.

To address this challenge, Forrester recommends seven tactical strategies for wealth and asset management firms to derisk customer relationships. These strategies include investing in advisor retention, adopting team-based relationship management, and institutionalizing client knowledge.

Investing in advisor retention is crucial, as it reduces the likelihood of top advisors leaving the firm. Leading firms strengthen advisor retention through better technology, administrative support, and clear career and succession pathways.

Adopting team-based relationship management and succession planning is also essential. This approach ensures that clients know multiple people at the firm, making it easier to transition to a new advisor if needed. Firms often identify a backup advisor for priority clients and involve them in client meetings and investment reviews.

Institutionalizing client knowledge is another key strategy. Firms capture client goals, family dynamics, and investment objectives in their CRM and planning systems, allowing successor advisors to continue the relationship without starting from scratch.

Positioning expertise as institutional, rather than individual, is also important. Firms reinforce the value of their investment committees, research, and digital platforms to clients, rather than relying on individual advisors.

Wealth management firms are also using predictive data analytics to identify key-person risk and prevent churn. Early signals from internal data sources can be used to identify at-risk clients and households, allowing firms to take proactive measures to retain them.