Cracking Open the HNW Wallet

wallet-billfold-chain-padlockIn this article from in July 2013, Managing Editor Diana Britton, explores the need for wealth management firms to expand their service offerings.

NOTE FROM JOHN MOSBY: As founder and CEO of Archival Property Solutions (APS), I have embedded my italicized comments (highlighted in blue) into Diana Britton’s article to explain how APS can serve as a valuable resource for wealth managers and other trusted professionals serving the HNW market.

A new study by Aite Group found that firms need to invest more in data management and analytics technology to win a larger share of HNW wallets.
by Diana Britton

When it comes to their money, high-net-worth individuals don’t want all their eggs in one basket; in fact, half of wealthy investors with more than $1 million in assets spread their wealth across four or more firms, according to research by Aite Group. To win a larger share of HNW clients’ wallets, firms need to invest more in data management and analytics technology to improve the client experience, Aite says.

In this article by Russ Alan Prince, a founder and the Executive Director of Private Wealth magazine and author of the Serious Money column on, he makes the case that Family Offices—and by logical extension, HNW professional service firms—would be better off outsourcing functions that are outside their core competencies. Outsourcing speciality services typically leads to more cost-effective use of resources, higher-quality results and more satisfied clients.

Some of the largest firms are making the right moves, focusing more on knowing the client holistically and taking them through the discovery process.

For these forward thinkers, APS can gather and catalog important facts and data that help advisors be more effective while we remain quietly behind the scenes with ongoing administrative support.

“This kind of stuff needs to be automated,” said Sophie Schmitt, senior analyst in wealth management at Aite. “It’s really hard to have a really in-depth conversation with clients and to keep up with all of their goals and needs on an ongoing basis without the right tools and systems and analytics to help that advisor along.”

Why try to develop specialty tools and systems when firms like Archival Property Solutions have already done so and are offering them at a fraction of the total cost of developing, maintaining and providing ongoing support for such tools and services?

Schmitt’s analysis, based on executive interviews across 15 of the top 30 wealth management firms and on a survey of 400 advisors, found that reducing costs and meeting regulatory requirements consumed a larger share of firms’ 2013 technology budgets. Meanwhile, spending on client- and advisor-experience technologies, including client portals, mobile deployments, financial planning, data aggregation and customer relationship management, accounted for only 33 percent of 2013 budgets.

Archival Property Solutions’ offering maintains a safe distance from a management firm’s budget. Outsourcing the documenting and cataloging of a client’s tangible assets and then securely storing the resulting digital catalog with client-controlled access places no demand on a firm’s already limited resources. It is a specialty service paid directly by the client.

“[Firms have] left the client experience up to the advisor so much that home offices really have no control in some ways,” Schmitt said. “They can train advisors all they want but at the end of the day, there’s not a lot of oversight on exactly what advisors are doing with their client.”

Engaging Archival Property Solutions enhances the quality of advisor-client interactions.

And for advisors to win more wallet share, they need to keep in touch with their clients. Aite found that the top-performing practices are those that contact their clients proactively; firms say that best practice is for advisors to have 18 touch points a year with their clients. Advisors need the tools to help them to keep on top of clients and help them with what to say at those touch points, Schmitt said.

An Archival Property Solutions digital catalog is the holy grail of advisor collaboration. When maintained with current information, this documentation can keep advisors updated and informed, enabling them to better support their client relationships through convenient and secure sharing of images and information via computer, tablet or phone.

Some firms are doing innovative things in the areas of client- and advisor-facing technology. Schmitt points to Merrill Lynch’s new risk assessment tool, to give advisors insights into how they handle investment risk. Merrill is working with behavioral economists to get advisors talking less about technicalities with their clients and more about their basic financial situation—more akin to a therapist than an investment manager.

Firms are also partnering with complementary firms where they don’t have expertise, she added. Morgan Stanley recently partnered with PinnacleCare to provide health advisory services to the firm’s high-net-worth clients at a discount.

Clearly, firms like Morgan Stanley recognize that partnering with providers of specialty services is not only cost-effective, it gives clients added incentive to stay fully invested in the relationship.

It’s one thing to actually have the technology in place, but it’s another thing to actually get advisors to use it. Peer-to-peer sharing is one way firms are trying to motivate advisors, so they can access the collective intelligence when advising their clients. Morgan Stanley is rolling out an “Insights” tool that will allow advisors to research securities that other FAs have purchased for similar types of clients.

But a lot of the technology that firms are using is still basic; they’re still talking about basic data aggregation and getting a 360-degree view of the client.

“Firms that can get beyond that and can actually get a consolidated data store, where they can query a 360-view of their client and move beyond to the more interesting stuff of, ‘How do you analyze that data? How do you deliver insights to advisors? How do you create a way for advisors to access that data to make useful decisions?’ I see those firms being in the lead.”

An Archival Property Solutions digital catalog is so user-friendly and intuitive that even the most tech-averse advisor can master it in no time for convenient and productive collaboration with clients.


UPDATE: By engaging Archival Property Solutions, wealth management firms will also be addressing a core recommendation that Sophie Schmitt made in her November 2013 article on the Aite Group website, The Wealth Management Client Experience: Collaborative, Proactive Engagement Needed. She wrote:

Large players’ market share has been eroding since 2008, and assets have shifted toward firms that have been quicker to adapt to client needs for mixed self-directed and advisor-driven wealth management services, giving incumbent providers and new entrants the opportunity to build hybrid, multichannel solutions that satisfy more client needs under one roof.

Exactly. It’s also worth noting that the custom service offered by Archival Property Solutions can help wealth management firms better meet their clients’ needs at a time when both regulatory and cost-cutting initiatives are consuming a large portion of their technology budgets. This value-added service and technology can contribute significantly to a differentiated client experience, a benefit that is perfectly aligned with Sophie Schmitt’s call to action.

Click here to see a listing of all Archival Property Solutions blog posts.

About Archival Property Solutions, LLC

Archival Property Solutions documents and catalogs the tangible assets of high-net-worth owners for their personal viewing pleasure and support of crucial Family Office and wealth management activities. Clients who have substantial and complex holdings in multiple locations can now keep their catalog of non-financial assets stored securely for private, confidential access via computer, tablet or phone. When maintained with current information, this confidential digital catalog can keep owners and their trusted advisors better informed, enabling them to stay current with professional service objectives and to plan for, protect against, cope with and recover from life’s unexpected events.

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