The development of an effective brand is widely recognised as a strategic imperative by wealth management organisations.

The development of an effective brand is widely recognised as a strategic imperative by wealth management organisations.

According to Datamonitor’s latest survey of Wealth Management Market Leaders, almost three quarters of the respondents cite brand, image and reputation as the key factors determining a client’s choice of wealth manager—second only to service quality. And a similar percentage claim they plan to launch important branding/marketing initiatives over the next 12 months. In a recent white paper*, Datamonitor highlights a broad spectrum of such initiatives already being undertaken by a number of prominent wealth managers.

Yet for all this profession of interest in branding and commitment to brand development, “effective branding remains an elusive goal for wealth managers”, Datamonitor concludes. It would be hard to disagree. Despite rising expenditures on advertising, sponsorships, public relations and other forms of brand building activity, the fact stands out that the wealth management industry has produced few, if any, brand leaders.

UBS probably comes closest, but with a global market share of less than four per cent. As the larger private banks scramble in their search to sign up new customers in what is a tantalisingly large, multi-trillion dollar market, they do so under the banners of advertising campaigns which appear both uninviting and failing to identify any strong differentiation.

No doubt all these campaigns are based on data-rich consumer research which attempts to define and validate the wealth manager’s brand values, as well as mapping out its positioning against the peer group. But the target group which wealth managers are aiming at - mostly sophisticated high net worth investors - may not be capable of accurate description in terms of the sweeping generalised catch-all definitions on which mass retail-style advertising campaigns tend to be based. Why so?

In the first place, clients are looking for an intensely personal service with a trusted relationship manager; that requirement often overrides the need for a relationship with a specific financial institution.

Second, large global institutions are likely to be seen as remote and impersonal by individuals looking for an advisor who can provide a detailed understanding of local tax, investment and other conditions.

Third, size and global reach may be regarded by many clients as resulting in diseconomies of scale, notably in investment management performance where there is plenty of evidence to show that smaller, more specialist asset managers are capable of producing better, more consistent risk adjusted returns than the $500 billion plus behemoths.

Global advertising campaigns which seek to communicate a great deal to a great many people may run the risk of saying nothing very much to anyone in particular. High net worth individuals comprise a highly diverse universe differentiated in terms of ethnicity, financial aspirations, emotional needs, relationships, life styles, professional and other backgrounds etc. All the more difficult and indeed improbable that a single global campaign will effectively reach and, most importantly, engage with or produce the desired response from a significant portion of this heterogeneous target audience. Too often the result is bland communication producing the unhelpful response, “so what?”

The credit crunch, of course, has added a new layer of difficulty and uncertainty. Large financial institutions in their handling of mounting losses in the credit markets can only have added to levels of mistrust among individual clients resulting in a presumption that as they have mis-managed their own financial affairs in this way they should not be trusted with their clients’ money. There is also the parallel belief, given wider currency in recent months, that the “heads I win, tails you lose” compensation model operated by investment banks uniquely favours the employee at the expense of the employer’s or indeed client’s best interests.

Datamonitor cites data from Interbrand, the brand consultancy, to demonstrate the value of financial services brands. The 2007 top 50 rankings included seven global players in the wealth management sector, ranging from Citigroup with a brand value calculated at $23.4 billion to UBS ($9.8 billion).

An effective brand should at least in theory provide a strong defence against the sustained reputational hits which all these institutions have taken in recent months - although the series of catastrophic events which brought down Arthur Andersen and most recently Bear Stearns proved overwhelming against what were once well respected brands. It is hard to believe that recent events will not have taken their toll on the brand values of Citi and its peers in the 2008 Interbrand rankings.

*The Wealth Management Brand, Datamonitor: price $1,695