Enhance your client service with Business Processes

by Thibaut Jacquet-Lagrèze, Product Marketing Manager, Odyssey

Wealth Management is facing serious challenges. Due to market incertitude, front offices have been overwhelmed with work for the past few months. Relationship managers have to handle the growing dissatisfaction or sudden disaffection of some of their clients who in many cases have seen the value of their investments drop between 20% and 50% in a year. Even discretionary private clients, who usually have less contact with their bank, have been calling on their relationship managers a lot these last months. They are demanding more detailed up-to-date information on the value of their assets and, especially, on the underlying risk, in particular, debt and counterparty risk.

Many of them have radically changed their investment strategies and risk profiles by shifting a huge chunk of their assets to less risky instruments such as government bonds and cash instruments. More worrying is the fact that some clients even end up questioning the added value of the service received since their capital was not protected and nobody was able to anticipate the chaotic evolution of the markets.

Lesson to learn

To meet their clients' expectations, most banks have learned a lesson from this difficult period and are considering how to:

• re-establish confidence
• increase contact with clients
• be more transparent regarding products
• explain the risks to clients better
• structure advice better
• comply with investor protection rules

One way to apply these lessons in practice would be to close a so-called “Service Level Agreement” with the client. For a long time now, private banks have been providing a discretionary mandate service with a well-defined contractual framework. On the other hand, advisory or execution-only services are very rarely subject to a detailed contract that defines the exact nature of the service provided by the bank. Against the background of the financial crisis and tighter regulations, such as article 19 of the MiFID regulations, financial institutions are increasingly realizing that these services are not sufficiently defined.

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