Fees are being pushed downwards across the industry. Strong performance isn’t a given. So, where should asset managers focus to gain a competitive advantage?

The answer: client experience (CX).


The challenge facing investment managers

  1. Changing client expectations

The pandemic has skewed people’s reliance on digital channels. Investment management clients are no exception.

Investment managers have a lingering perception that they don’t need to ‘catch up’ to the CX stars of the consumer world. Many mistakenly think people’s expectations as a professional at work are lower than when they interact with brands as a consumer.

This will prove to be an expensive assumption once the firms who are investing heavily in CX leapfrog those who talk about CX with mild interest (or, don’t talk about it all…).

Retail clients, according to BCG’s 2020 global asset management report, are the world’s fastest growing segment with assets rising by 19% in 2019. This segment is going to expect the same slick, seamless CX from investment managers as they do from their digital banks.

  1. Price and performance aren’t enough

Historically, many asset managers have built their business around outperformance and star managers or competitive fees. However, both these approaches have natural limitations.

Fees can only go so low as zero (except in the case of the US-boutique who launched a negative-fee fund in 2019). Very few managers have managed to sustain outperformance, making it an unreliable differentiator to build your business around.

Disappointment in performance, especially when compared with low-fee tracker funds, is contributing to an erosion of value in investors’ minds. A simple, intuitive and tailored client experience is the strongest way to build up your clients’ perceptions of value.


What is CX, really?

CX refers to the overall impression you leave your clients with. Whether clients are interacting with a brand for personal or professional reasons: emotions play a big role. An individual’s emotions will influence, skew or sometimes completely determine their next decision.

A study based on the assumption that sunshine makes us happier uncovered a positive correlation between sunny days in 26 countries and the stock market performance on those days. Rational decision-making is a fallacy; we are all humans, meaning emotions will always play a role in our decision-making – even financial ones.

The more emotional a moment is, the more memorable it is. This is why, often, a negative experience with a brand can unfairly skew that customers’ overall impression of the brand. It is mission-critical to avoid broken or particularly cumbersome client journeys. And those who manage to not only get CX right, but actually delight clients at pivotal moments in client journeys, will be the winners of the CX competitive advantage battle.

CX is the sum of its parts; the overall impression an individual has of your firm is driven by every single touchpoint, both direct and indirect ones. Therefore, when it comes to CX, nothing can be out of scope.


Where to start your transformation journey

Traditionally, asset managers have been product-led, following the old adage ‘build it, and they will come’, often relying on star managers and outperformance to attract and retain clients. Many firms still group their clients based on the assets under management (AUM) or revenue they represent. Neither of these things indicates who these clients are or what they need.

  1. Get to know your clients, and group them by need

It is not uncommon for investment managers to still rely on rather crude, and sometimes quite dated, understandings of who their clients are. I’ve come across a number of firms who group their clients into broad buckets of ‘retail’, ‘intermediary’ and ‘institutional’ and don’t go any deeper than that.

The client experiences you build won’t be exactly what your clients need if you’re building a one-size-fits-all experience. Invest time and money in research to understand who your clients are, what decisions they make and what drives and influences those decisions.

There will be some needs you are perfectly placed to address, and other needs you’d struggle to satisfy well. By grouping the market according to need you can focus on the people who will derive the most benefit from what you offer, and waste no time on the people who are unlikely to ever invest with you.

Many lament the lack of data on individuals as a barrier to hyper-relevant, personalised CX in the B2B world. And it’s true that the data available to most investment managers is not comparable to the data leveraged by giants like Amazon, Google or Facebook. However, you don’t need a sea of data on every individual to do a great job of CX – this is where personas come in.

Personas humanise the segments you’ve identified. Typically based on archetypes, they can be a little simplistic, but they also create a more tangible way of understanding your clients. They’re a great way to get everyone in your business thinking about the needs of the individual on the other end of the experience they’re crafting.

  1. Map your clients’ experiences and identify the ‘moments of truth’

Firms without a strong CX focus typically pay attention to pieces of the puzzle, but rarely the whole thing. This is reinforced by organisational siloes.

When a client deals with your business, they don’t think about the fact that there are different teams behind the content they see on LinkedIn, the webinars they attend, the sales conversations they have, the monthly commentary they see or their experience when redeeming their funds. Therefore, it’s vital that all teams with a direct or indirect hand in client touchpoints gather around the table to consider and optimise the end-to-end experience of your clients.

A key step in transforming the experience of your clients is mapping their end-to-end experience with your business. This starts from the moment they become aware of your brand and continues to the moment they eventually redeem their investment.

Once you’ve mapped the CX for each segment you can work out where the all-important ‘moments of truth’ are. These are the interactions you can’t afford to get wrong. A commonly cited moment of truth is onboarding: your new client might have had an incredibly smooth experience up to this point, but if onboarding is clunky and cumbersome they may be less forgiving in a season of underperformance.

  1. Transform your moments of truth, but don’t forget the small stuff

You know who your clients are, you know their end-to-end experiences, and you’ve identified the moments of truth that are crucial to a successful relationship.

So, how do you stack up in those moments of truth?

Chances are, you’ve got room for improvement.

It’s important not just to consider these experiences from the front-end, from the eyes of your clients. It’s also important to consider the back-end driving these experiences. What technologies and teams determine the quality of these experiences?

A raft of legacy technology can be a real barrier to delivering a world-class client experience. This is a golden opportunity to rationalise the technology you’re using; strip out what you don’t need and ensure you’re fully leveraging what you do.

Data is a key weapon in your arsenal too. If you manage to centralise the data you hold on your clients, you’ll enable all areas of your business to consume that data in the name of building excellent client experiences.

If you’re investing heavily in CX you’ll undoubtedly arrive at a list of big-ticket projects, such as building a new client portal, overhauling your suite of websites or setting up a lead nurturing approach. But this shouldn’t mean you take your eye off the ball when it comes to those smaller moments of truth, such as the quality, format and timeliness of fund commentary.

You might have built an excellent website with a particularly strong conversion rate. However, if your existing clients can’t quickly understand the context behind their investments’ underperformance, you may find you’ve got a renewed focus on client retention to stop the outflows.


Whether you’re ready for it or not, the battle for world-class CX is here. And my hope is not only that the investment management industry will collectively raise the CX bar, but that the old product-led model is turned on its head. I hope that as a result of truly understanding client need, sales and marketing teams are able to proactively bring data-backed insights to the investment team to drive product innovation.