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Warning to Wealth Managers: ‘Don’t Be Creepy’

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September 3, 2014

The research and advisory firm Celent has released a new report cautioning wealth management professionals to be careful about using personal information, recent location and analytical data in their communications with clients that could strike them as “creepy.”

The report, entitled, “Don't Be Creepy: Analytics and the Client Experience” is written by Isabella Fonseca, a research director with Celent's Wealth Management practice.

In the report, Celent focuses on three hypothetical messages that the firm tested with survey participants in the United States and the United Kingdom and how they fared with customers, leveraging personal data and analytics. The results indicated that most people don't like receiving messages that implied firms had gotten access to their location or transaction data.

Isabella Fonseca

Participants were asked to rate each message on a scale of 1 to 7, with 1 meaning that the participant would hate to receive it and 7 signifying that the participant would love to receive it. The messages were:

• Investing vs. Values: “Recent news stories suggest that one or more of your investments is not in line with your personal values - please call us to discuss (i.e., not meeting green objectives, testing on animals, involved in war, etc.).”

• Location Authorization: “We noted you have checked in at a location outside the country, so we have pre-authorized your cards and accounts for use there.”   

• Location Purchase: “The item you just purchased is available for 10 percent less at a short distance from your current location, click here for more details.”

Celent pointed out that many wealth managers are increasing their investments in analytics, but at the same time they need to address issues of customer privacy. It recommends they understand the customer characteristics that are likely to produce positive or negative reactions to messages.

"Based on the data found in the survey, wealth managers are left with a number of lessons,” said Fonseca in a statement. “First, the findings show the importance of segmentation. Segmentation drives the need for analytics, while analytics drives ever more sophisticated segmentation strategies. The ultimate goal of analytics is to arrive at a segmentation of one. But that will be an iterative process, fraught with trial and error. This means that analytics and data management systems must be tightly integrated with CRM systems so that advisors, marketing teams, and product teams can create the necessary segmentation models to truly utilize the data they are receiving. It also means that wealth managers need to determine whether they are utilizing customer analytics for service improvements, product improvements, or both."

Celent found that the age of the person surveyed negatively correlated with their attitude toward the message (that is, the older the survey respondent, the less the respondent liked the message). That finding held across all the messages tested. Conversely, presence in a loyalty program corresponded with a more positive reaction to the messages. Respondents in the U.S. were also more likely to respond well to the Investing vs. Values message.

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