The Changing Role of the Relationship Manager
The relationship between wealth managers and their clients is not what it used to be. Public opinion of the financial sector, as a whole, has become sharply critical—people are outraged by the inability of the industry. Clients have become far less trusting and increasingly likely to jump to another wealth manager. But the relationship between RMs and their clients has actually changed well before the onset of crisis.
Rise of the Product-Push Model before a Crisis
At many wealth-management institutions, particularly the larger ones, the continuity of client relationships has— over time—been disrupted by organizational changes and the shuffling of client portfolios among RMs. In some cases, the goal was to bind the client more to the institution than to an individual advisor. In other cases, however, the institution itself simply could not maintain a consistent service model. At the same time, investors became more interested in diversifying their wealth across institutions. And as information about financial products became more accessible, some investors became self-directed. They tended to be less interested in holistic planning and more interested in specific types of support or investment recommendations. The role of the RM has also changed. Since the beginning of the decade, the RM has become less of a confidant and more of a salesperson. This shift was most apparent in the brokerage model, where RMs began providing targeted product recommendations rather than trying to understand a client’s overall needs and priorities. The move to a product-push model was particularly pronounced in institutions with centralized asset-management departments that not only designed the products but decided which ones an RM should sell. The product-push model diverged from a focus on client relationships in three fundamental ways. First, investment strategies were not necessarily tailored to the client’s holistic needs....
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