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Responding to the CX imperative

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CX has become the differentiator

Multi-decade trends of over-supply in the market have, for most asset managers, all but eliminated their ability to differentiate themselves based on either product performance or pricing (Bloomberg, 2019).

CX differentiators

For those firms, unless they have a well-known brand, CX is potentially the only differentiating factor they have left. It’s tough to build brand and, for active managers, reputation relies on uncertain future investment performance. This makes it risky to rely on brand as the sole source of differentiation. As a result, for most, CX is a commercial imperative and it has become the differentiator.

CX will impact your profitability twice

As the asset management industry’s mastery of CX catches up with other parts of the broader economy, firms are learning that for good or bad CX will impact profitability twice.

Over 90% of investment professionals agree that a favourable CX will maintain client satisfaction that, in turn, will protect gross profits: increased revenue retention, deepened client relationships, and targeted and efficient prospecting.

On the flip side of the P&L account, delivering an end-to-end experience in a deliberate, governed and controlled way minimises complexity, which manages costs and defends net profits.

Despite this logic, asset managers are losing pace with their clients’ needs 

2019 data from across the European asset management market is signalling an industry-wide CX issue, with twice as many indicators that asset managers are delivering an unfavourable CX than a favourable one.  Looking at other 2019 data, Casey Quirk found that asset management distribution organisations have failed to keep up with their clients’ needs.

This presents an opportunity, but …

About 75% of asset managers are not ready to seize it, with the majority of firms choosing instead to address the effects of the problem tactically, rather than tackling the root causes.

Accomplish found most firms have attempted to respond through unconnected and incremental initiatives that target individual ‘touch points’ rather than the end-to-end client journey.  Examples include onboarding projects, reporting projects, and billing projects, but the list of initiatives spans the client journey, which strengthens Accomplish’s research findings that a deeper and systemic root cause exists – the general lack of overarching CX strategy and governance.

Separately, Casey Quirk’s analysis suggests that, over the last decade, firms have increasingly tried in vain to solve what is already a digital CX issue through greater and greater investment in [analogue] distribution staff.

Early movers are seizing the opportunity

In an intensely competitive environment where broader market forces have driven down fees and challenged profitability, early movers are stealing a march on their rivals by using CX to exploit its double commercial benefits:

  1. Longer client relationships with greater organic growth from existing business.
  2. Optimised operational costs as a result of minimised complexity across the client journey.

While firms’ CX capabilities are at different stages of maturity, in general, these early movers are developing strength across five components of CX:

  1. Insights into clients’ needs
  2. Suitable and feasible CX strategy
  3. An intuitive, coherent and engaging client journey
  4. A culture of client centricity
  5. Effective CX governance and controls

The CX Maturity Benchmark  

Through the European Asset Management CX Forum, Accomplish is working with both early movers and firms with ambition to differentiate through CX. The group’s current focus is on establishing the industry CX Maturity Benchmark.

CX has become the differentiator, and the experience a firm gives its clients is controllable, so this is a perfect starting place for those who want to understand their current CX and how it compares against their peers.

Contact us to learn more about the CX Maturity Benchmark.

CX Maturity Benchmark
Adam Grainger

Adam Grainger

Asset management CX specialist. 20-year career in the investment industry – from Transformation Director roles, to regional COO positions.