HNW Client Onboarding: Tackling the Rise in Client Dropouts

Fenergo has partnered with WealthBriefing to research client onboarding in the financial services sector across the globe. We interviewed senior wealth management professionals to get the viewpoint from the coalface and understand what is happening with client onboarding.

We’ve packaged our findings in Connecting the Client Journey report. In this blog, I want to hone in on one of the key emerging themes.

HNW Client Onboarding Times Are Up

HNWIs typically expect an onboarding time of around 20 days*. Yet we find that nearly one in three (28%) firms take longer than this to complete client onboarding, with half of these (14%) taking double the expected time or even longer. In 2014, just 16% took more than 20 days to complete client onboarding. More than half (54%) of respondents in Asia-Pacific reported onboarding processes exceeding 20 days, particularly among those based in Hong Kong and Singapore.

We can identify the need for increasing amounts of information to achieve regulatory compliance here as a key factor, with wealth managers reporting data collection as the second most time-consuming element for them. Far too often, the onboarding process is manual and labor-intensive, which adds both time and complexity to client onboarding.

According to Calum Brewster, Managing Director – Regional Head UK at Julius Baer, “If I look at the past ten or even five years, the number of data points that we require from a client to deliver a bespoke service and fulfil all our AML (Anti-Money Laundering)/ KYC (Know Your Customer) and suitability obligations has grown dramatically to become very large indeed.”

Wealth Managers Fear Drop Outs

The increase in regulation and the subsequent extension in average onboarding times could lead many clients simply to drop out and explore an alternative financial services provider, and this is a key concern for 52% of wealth managers, with 16% seeing this as a top-level threat to business growth.

Swift, efficient client onboarding is a main key performance indicator (KPI) for many firms and those first few weeks are so crucial to building a strong client relationship. This increases the chances of upsell and cross-sell, while potential clients will remember a poor experience. We even encountered one firm that had a 50% dropout rate over an average three-month onboarding period. Imagine the cost to business!

How To Address The Client Onboarding Challenge

Smaller wealth managers, in particular, remain mired in manually-intensive client onboarding processes. Technology holds the key to automating much of the onboarding process, reducing both the burden on humans and the chance for error.

The Software-as-a-Service (SaaS) model for client onboarding technology offers financial institutions greater flexibility and control over costs. To be successful, it is essential that data is freed from siloes, such as the Customer Relationship Management (CRM) system, so that all stakeholders in the client onboarding process can share and benefit from relevant data. This avoids frustrating returns to the client for more information, but we find that little improvement has been made with integrating onboarding processes since 2014, with just 17% of wealth managers reporting a good level of automation.

The technology is there to enable previously disparate systems to talk to each other and share relevant information quickly, efficiently and securely. Adoption of these technologies reduce the time to onboard clients, improves the customer experience and provides valuable opportunities to upsell and cross-sell products and services. From an operational perspective it makes sense, too.

Where are you on your client onboarding journey?