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8 Reasons why Customers don’t understand the value of Wealth Managers

How often do you hear from customers:

“Your fees are too expensive, your rates are not competitive”

  • “Your investment team is not that good, compared to another bank”
  • “I can make more money in my own investments than putting money in Unit Trust, Stocks, Bonds”
  • “They are too high-risks.  I invest into properties, my own house, and my children’s future.”

Why customers don’t understand the value of wealth managers? 8 Reasons why –


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No. 1 They think they can be financially savvy.

That’s true.  Perhaps many could.  But most give up after making a few bad investment decisions or find that it is too time-consuming.

From 2005 to 2015 in Asia, employment opportunities, property & equity boom had resulted in unprecedented wealth growth.  Many became over-confident of their investment acumen or ride on friends’  recommendations whom made investment sound as easy as ABC.


No. 2 Clients have a Passive Mindset

Buying a Car
Buying a Car

Most people will spend lots of time researching on travel destination, flights, cars, watches, bags, gadget. When it comes to researching on insurance, portfolio, investments, foreign exchange, they give up in less than 5 minutes.

When they meet a travel agent, luxury items sales man, car agent, they could exchange views and discuss excitingly.  But when it comes to meeting a banker or wealth manager, they somehow turn quiet for an extended period of time, before either saying they will rely on you or they will think about it.

In other words, even though they could be making their most important decisions and placing almost all their wealth into your hands as a wealth manager, they spend mere minutes to understand what they are going to do.


No. 3 What is paying fees?

What is the value of wealth management advice? Most customers don’t have a clue.  There isn’t a price tag to quantify wealth management advice.  So the best way to understand the value or price of wealth management advice is by doing a comparison: Transactional or cost-based approach.

Cost of Transaction (illustration)
Service Provider Fee
Bank A 3%
Bank B 2.50%
Financial Advisory Co. 2.50%
Online Portal 1%
Brokerage 1.50%


After doing a price comparison, it isn’t difficult for anyone to decide that buying from the cheapest, should be the better decision.  But is that really the case?

Read: How the old rich tap onto the expertise of wealth managers?


No. 4 Looking for Instant Results


Wealth Managers, like doctors, are important to anyone, as long as we can live.  Customers don’t see it that way.

Despite the fundamental approach of quality wealth management is to think long-term and work short-term, most customers look at short-term results.  Is it the fault of customers?

When most default financial plans have a timeline of:

  • 1 – 2 years
  • 3 – 5 years
  • 6 – 10 years
  • More than 10 years

While the human life cycle is:

  • Age 0 – 120 (Typical maximum insurable ages)
  • Age 71* (Average Life Expectancy in the World)
  • Age 83* (Average Life Expectancy in Singapore)
  • Average Adult Working Life Period (40 years 25 – 65)

Source: World Health Organization 2013

And along many short-term financial options, customers tend to choose short-term plans to accommodate any future or sudden financial needs such as buying a house, car, travel, education, medical or investment opportunities.


No. 5 Peer Comparison

Inevitably, customers make comparisons. That is the only sensible assessment customers can have.

Customers will compare on with friends or other customers on entry /exit price of investments, fees paid, brand differences, service level, and losing focus on what wealth management is about. And if the wealth manager can’t put up a convincing case, the plan looks to be in jeopardy.

Customers don’t understand a wealth manager is not a provider of the cheapest plans and the best solutions.  And no wealth management outfit can do that, persistently.

Imagine the possibilities:

  • Annual Portfolio Returns +20%
  • Insurance Coverage $500,000
  • Fee: 0.1%

Interesting Documentaries:


No. 6 They have Bad Experiences

Senior couple having financial troubles
Senior couple having financial troubles

The global financial industry had been filled with bad experiences.

  • Big Losses
  • Below Benchmark Performances
  • Unnecessary Product Recommendations
  • Failed Products
  • Poor Service
  • High Turnover of Advisors

It is difficult to find good quality Wealth Managers as much as it is difficult to find good quality clients.  Thus, neither the client, the wealth manager nor the financial institution find it worthwhile to pursue a long-term wealth management relationship together.


No. 7 New Advisors / Experienced Advisors

Customers find it challenging to let young or new advisors help them manage such a big amount of money or their financial decisions.  They find that experienced advisors are better, and end up finding they are already serving their existing pool of customers, or those that are considerably wealthier.

Unfortunately, there is always a tradeoff.

Advisor Type Pros Cons
Young Advisor More time for customers Inexperienced
Experienced Advisor Experienced Less time for customers


No. 8 Problematic Financial Industry

Newspaper headlines - financial crisis on 2008
Newspaper headlines – financial crisis on 2008

Since 2008, there has been endless supply of negative publicity.  Scandals, collapse, consolidations, regulations and FATCA (what has a U.S. policy to do with everyone in the world?).

  • Credit Default Swaps
  • Sub-prime Mortgage
  • Rating Agencies
  • Libor Fixing
  • Foreign Exchange Fixing
  • Madoff, Lehman Brothers
  • Collapse of Hedge Funds
  • Exorbitant Payout for Investment Bankers
  • Consolidation (M&As)
  • Regulations

Regulators, economists, bankers, investment professionals wealth managers are scratching their head: what could be next?  No longer anyone could walk proudly to their customers and announce we have hundreds of years of expertise that is built on trust.

“No longer anyone could walk proudly to their customers and announce we have hundreds of years of expertise that is built on trust”

These are 8 reasons why customers don’t understand the value of Wealth Managers

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