Majority of US Wealth Management Clients Are Not Advocates of Their Firms: IBM Study

Firms That Build Customer Advocacy Can Drive Growth and Create Competitive Advantage

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ARMONK, NY - 25 Feb 2008: An IBM (NYSE: IBM) Institute for Business Value study of more than 1,300 US wealth management clients reveals more than half (57 percent) are not advocates of their firms and over 40 percent do not consider their firm a "trusted advisor" to help them meet their financial goals.

The study, "Building Client Advocacy: New Opportunities for Wealth Management Firms," comes at a time when firms are scrambling to differentiate themselves and meet changing consumer demands for new investment products and services, especially from a burgeoning baby-boomer population in its peak years of asset accumulation.

"Wealth management firms have attempted to become more client-centric and respond to their clients' needs and expectations by placing more personnel on the front lines. This strategy has met with limited success with costs often outstripping gains resulting in minimal improvement of client satisfaction," said Douglas Butler, financial markets leader, IBM Global Business Services. "We believe firms must move away from traditional client satisfaction metrics and start focusing on client perceptions about the overall business relationship. For example, firms that can strategically use client attitudinal information to target and improve high-impact service interactions can strengthen their ability to improve client loyalty, wallet share and business performance."

As part of the study, IBM deployed a unique measure of customer loyalty, the Customer Focused Insight Quotient (CFiq), to determine if a client considered themselves an advocate, antagonist or apathetic. Unlike other satisfaction or promoter measures, the CFiq goes beyond a single measure of satisfaction by combining wealth management clients' ratings of three statements:

  1. I would recommend my primary wealth management firm to my friends and family members.
  2. If I needed a new financial service or product, I would go to my primary wealth management firm first.
  3. If another wealth management firm offered a set of competitive products or services, I would not switch firms.

The resulting scores are used to group clients into three advocacy segments:

Only 43 percent of wealth management clients indicated they are advocates of their wealth management firm. These results should be disappointing to managers in an industry that defines itself by product and service excellence. The scores fall below Property and Casualty insurance (P&C) scores, but are above retail banking scores (51 percent and 24 percent advocates, respectively). One out of every five wealth management clients (19 percent) is an antagonist -- meaning they have negative attitudes. Another two of the five (38 percent) are apathetics. Such attitudes may be indicative of a failure on the part of the firm, despite likely investments in better products, improved channel experiences and sophisticated advisor programs.

Additional key findings include:

Becoming a customer focused enterprise
Developing a new view of clients and advocacy is an important first step in converting clients into advocates. At the highest level, firms must reach out and collaborate with their clients to build compelling and distinct value propositions and become a customer focused enterprise (CFE). A CFE integrates clients' views and attitudes into the design and execution of core operations. Some of the key actions firms should consider include:

1. Convert apathetics to advocates by strengthening staff dialogues with clients. Apathetics represent a fertile market to upgrade into advocates. Firms are apt to be rewarded with increased wallet share and heightened trust if a concerted effort is made to improve staff interactions with clients, enhance collaboration and reduce turnover.

2. Build client experience analytics capability. The most critical enabler is the ability to collect, analyze and act upon new client data that reflects attitudes and dimensions not available through conventional management reporting.

3. Refine operating models to address service deficiencies and better satisfy target segments. Operating models combine the resources and expertise of both the firm-wide operations and those delegated and controlled by the individual advisor. The mix of advisor interactions and service delivery through other channels must be coordinated, along with the product experience, to optimize the impact the entire experience has on the client.

Research methodology
Primary data was collected from 1,311 U.S. wealth management clients -- each with investable assets of over US$500,000. Clients were surveyed via a detailed online questionnaire consisting of 38 questions. Twenty questions captured clients' perceptions of front-line service capabilities, eight questions focused on clients' qualitative assessment of the firm, and ten questions were designed to capture demographic and transactional profiling attributes. The objective of this study was to understand clients' perceptions of their primary wealth management firms, based on respondents' ranking of key service interactions and product attributes (accessible and knowledgeable staff, innovative product offerings, quality of reporting, etc.) and their emotive disposition toward their firm (e.g., view as a trusted advisor, recommend firm to friends and family, etc.).

Study Authors
Brian Lincoln, associate partner, wealth management practice, IBM Global Business Services

Robert Heffernan, associate partner, global leader in the CRM Service Area, IBM Institute for Business Value

To view a copy of this study, visit

For more information on IBM, visit

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