How BMO Financial is evolving to meet the changing needs of its clients

Wealth management is evolving. Clients now expect a highly bespoke service from their expert advisors, forcing firms to reevaluate their value proposition in order to stay competitive

A wide array of market forces have made it crucial for wealth management firms to rethink their traditional, product-centric approach
A wide array of market forces have made it crucial for wealth management firms to rethink their traditional, product-centric approach  

Wealth enables unique opportunities and advantages, but also complexity, responsibility and, at times, conflict. Given this ever-changing environment, high-net-worth individuals nowadays are seeking more meaningful connections and a highly personalised approach when it comes to their wealth needs. While many are currently diversifying their holdings across multiple financial institutions, this impacts an advisor’s ability to provide a comprehensive wealth solution. Having a team of specialists and professionals instead, however, can give an integrated approach that facilitates a better client experience, as actions are coordinated with all aspects of wealth considered.

A number of industry forces are compelling firms to rethink their traditional, product-centric approach to wealth management

Through Net Promoter Score (NPS) customer satisfaction surveys, it has become clear that clients want more proactive and frequent contact. In the past, clients solely sought out expertise, but now they are increasingly looking for a coach-like individual who can help them make difficult decisions. As such, there is more focus on professionals who have an actual desire to help clients meet their individual goals, while also getting to know them and their families so that they can provide tailored advice. Given the current evolution of the wealth management industry, World Finance spoke with David Heatherly, COO of Private Banking for Canada and Asia at BMO Financial Group, about the impact of these changes and how they benefit both sides of the relationship.

What brought about this shift in the wealth management space?
A number of industry forces have made it imperative for wealth management firms to re-evaluate their value proposition. Such forces, ranging from low client confidence to higher regulatory standards, are compelling firms to rethink their traditional, product-centric approach to wealth management. Additionally, wealth management firms are facing increasing competition from new players, such as robo-advisors.

Expectations in terms of service are also changing: social media and the services and information available online are influencing what clients expect of us. The expectation is that we keep pace with brands like Google or Amazon, which is a very different approach than what we have taken historically. Our ability to differentiate ourselves involves getting to the core of client needs and developing accordingly.

From your experience, what are the most valued advisor competencies?
Advisors still need to be experts in their given area – whether that’s banking, investments or trust. Nonetheless, in light of changing requirements, it’s important that private banking professionals are able to build an emotional connection with clients and their families, so that they can build trust through a truly personalised service.

How are private banking firms evolving to keep atop of these trends?
Private banking firms are bringing together their different lines of business in order to have entire teams deliver advice to clients. In many cases, this also involves having one point of contact for the client to simplify communications; this lead will then bring in other specialists and experts as required to help clients achieve their goals.

What is the top indicator of advisor effectiveness?
NPS customer satisfaction surveys are by far the best measure of advisor effectiveness, as the indicator is based on actual client feedback. What’s more, clients who are willing to refer their friends and family typically have a strong emotional connection with their relationship manager. We coach our professionals on how to create this emotional connection by reducing anxiety through proactive contact and improving confidence in the future through a comprehensive wealth plan. We also teach them how to motivate clients to achieve their goals, particularly by showing them how our services can help.

How is BMO addressing these changes in the market?
BMO Private Banking has been using an integrated team approach for several years now. Our business is built from the traditionally separate disciplines of banking, investment management, estate and trust, and wealth planning. However, our business model is unique in the sense that we are truly integrated – under one profit and loss statement, one set of targets and one leadership team.

Our model is not focused on products, but rather on designing integrated solutions to enable our clients to achieve their personal goals by working with them to develop a comprehensive and flexible wealth plan. Wealth planning is at the heart of everything we do. When we begin our client relationships, we get an in-depth understanding of their goals and priorities relating to family, work, lifestyle and money. We then regularly fine-tune the wealth plan to ensure it accurately reflects their current situation. By understanding what matters most to our clients, we can provide relevant advice and offer creative solutions to help them achieve their goals and dreams, all the while making the unmanageable manageable.

What role does the relationship manager play?
All BMO Private Banking clients have a dedicated team of professionals, coordinated through a single point of contact – the relationship manager.The relationship manager is the main point of contact for the client and takes ownership of the client experience. While the relationship manager has a speciality (be it investment management or banking, for example), they engage with their colleagues when other solutions are required.

What are the benefits of this approach?
This approach provides benefits for both the client and the business. For the client, they have a dedicated team of professionals – with one lead relationship manager – to help them achieve their goals. This team knows the client’s story, they know all of their goals and objectives, and so they can consistently serve the client and their family over time. Essentially, the team works closely with the client to build a comprehensive wealth plan based on what they learn from the client. Together with the client, the team takes action on the wealth plan and regularly revisits it to make sure that the client’s situation is always at the forefront of any strategy. Therefore, we are simultaneously able to save them time, reduce worry and promote confidence in the future.

In terms of the business side of things, this approach enables clients to feel more engaged and, in turn, more loyal. It also provides opportunities to work with the entire family, as well as the ability to continue relationships throughout family and wealth transitions.

How will BMO Private Banking continue evolving in order to meet shifting client expectations and a changing market?
The feedback we’ve received indicates that many clients are looking for a combination of digital tools and professional expertise. More and more individuals are comfortable using these tools to manage simple transactions, but they still need professional advice and support for more complex wealth management requirements. Professionals also play a key role in making sense of how changing market conditions can impact their clients’ wealth and goals.

If we look at the demographics of our current portfolios, we find that they are largely comprised of Baby Boomers, whose needs we have, over time, learned to meet. If we fast-forward a few years, we will be dealing increasingly with the emergent and affluent Generation Y, or Millennials and digital natives, who have very different expectations and needs. This generation is looking for more frequent and smaller bursts of information, and for advisors to use technology to facilitate interactions – for example, a five-minute phone call or brief video conference as opposed to a 30-minute meeting.

Consequently, face-to-face interactions may become less important as multiple mediums become available. This is likely, as Millennials want timely, accurate information from credible sources – and they want it now. It’s more about the answers (and who has the information fastest) versus the location of the source. Consequently, we have to start shifting how we conduct business to adapt to this generation by understanding how we will continue to add value and, in turn, communicate it. We have to think about what this means for us – how we will develop trust remotely and how we develop virtual relationships effectively.