Has COVID-19 Forever Changed How We Engage With HNWIs?
Face-to-face meetings and physical interactions are no longer ideal for reaching wealthy clients. How will the financial services sector adapt to this new challenge?
David Gwyther, Business Development Director at Butterfield Mortgages Limited, explores how trust can be built with HNWIs in the “new normal”, and why tech alone may not cut it.
The financial services sector is undergoing an important – and what some might say “long overdue” – transformation. The sudden onset of COVID-19 has forced high street banks through to specialist mortgage providers and alternative lenders to adapt to a new set of circumstances few would have anticipated.
Social distancing measures have forced the majority of these organisations to work remotely and this has provided its own set of challenges. In one respect, they have had to ensure the appropriate systems and processes are in place so that their employees can carry out their same roles and functions outside of the office. This has meant putting new systems and processes in place, including the adoption of digital tools.
As part of adapting to the “new normal”, another ongoing challenge has been reactively responding to the needs of their existing clients and the wider market. Again, this has proved difficult for some. Recent research by Butterfield Mortgages Limited (BML) revealed that 19% of homeowners had “lost faith” in their bank due to “poor support” it provided during the coronavirus. On top of this, one in four (25%) feel as though their banks have not been proactive in providing financial advice.
With the UK tightening lockdown measures in a bid to contain a spike in coronavirus infections, it is clear that remote working and social distancing will remain the norm for the foreseeable future. Naturally, the financial services sector will need to question whether they methods they are currently relying upon to engage with their customers will be effective in the long term.
While COVID-19 has had a positive impact in so far as forcing large institutions to review traditional (and outdated) practices, there has been an assumption that technology naturally provides the answer. In some respects, I do agree with this proposition. However, when it comes to engaging with certain types of clients and networks, I believe that relying on digital adoption too much could in fact damage relationships.
Naturally, the financial services sector will need to question whether they methods they are currently relying upon to engage with their customers will be effective in the long term.
Understanding the principles of effective client engagement
Working in the UK’s prime property market, I regularly deal with the needs and interests of high net worth individuals (HNWIs) interested in high-end real estate. The profile of this client can range from a non-UK resident seeking a property in prime central London (PCL) as a buy-to-let investment to a domestic buyer seeking a primary residence.
As someone who has worked closely with HNWIs and the brokers who represent them, it is clear to me that there is a certain way of engaging with this type of client. Given the size of the financial portfolios, their unique income structures and wealth management needs, HNWIs will only work with financial service providers they trust. Establishing this trust and confidence is a long-term outcome that requires effective client engagement. In other words, financial providers need to demonstrate their expertise and ability to effectively cater to the needs of HNWIs, all the while developing a personal and transparent relationship.
In my mind, this is the ultimate objective of any organisation seeking to engage with the wealth and ultra-wealthy. Before the COVID-19 pandemic, professional and social networking events, conferences and physical meetings proved to be the most effective avenues of communication. As we all know, the coronavirus means the majority of these events have been put on hold. Some have been held online and while they have proved to be a useful solution, I only see this as a temporary measure.
A similar observation can be made when it comes to video conferencing. While no doubt an effective measure in overcoming the obstacles posed by social distancing, this is not likely to totally replace physical interactions with clients. Many in my sector agree that there is something vitally important when physically engaging with HNWIs. Building trust and in turn future client networks is not something that can be achieved by digital communication. That’s why we should not see technology as a tool to be used to build effective relationships.
The future of client engagement in the financial services
Drawing from the aforementioned BML survey, there was another interesting finding worth mentioning. We found that 31% of homebuyers and homeowners were frustrated by the ways their banks depend on chatbots and automated services. What this shows is that while tech is important, the financial services sector should not overlook the value of physical interactions with their clients.
These are important observations that need to be fully appreciated by the sector so that it can manage the current and future needs of the market. After all, once the COVID-19 pandemic finally subsides, we should expect to see the return of professional networking events and physical meetings.
Yes, there will be a greater reliance on technology to carry out certain communication roles. However, those based place to meet the future demands of the market will be those who have integrated technology as part of a client engagement strategy focused on building trust, confidence and longstanding relationships. This is extremely vital when dealing with the needs of HNWIs.