A CNBC market report estimates that Amazon will capture 50% of all e-commerce in the United States by the end of 2018. More importantly, 49% of consumer first product searches are conducted directly on Amazon. Consumers and businesses appreciate the ease of comparing products, pricing and the transparency millions of customer-generated customer reviews provide. The entire shopping process is fast and seamless. Products and services can be sought out, researched, ordered and paid for within minutes and in some cases delivered within the hour. More than 300 million people shop on amazon.com each year of which millions are taking part in Amazon’s subscription service. Research conducted by Consumer Intelligence Research Partners (CIRP) found that Amazon’s Prime subscription service has 95 million members in the US, who spend an average of $1,400 per year. So what makes Amazon so successful? We believe that Amazon’s key value proposition lies in its ability to create value by making people’s life easier. What can the wealth management industry learn from Amazon?
Creating a Powerful Value Proposition
For the longest time, financial advisors believed that their main role was managing their clients’ investments. Various studies such as the Ernst & Young “2018 Management Outlook” or Capgemini’s “Asia-Pacific Wealth Report 2018” have indicated that this is no longer enough. Clients, more specifically high net worth individuals, are looking for holistic wealth management services. These include hybrid-models offering seamless digital reporting services and highly-customized wealth management solutions. In other words, they are looking for seamlessly provided products and services they can trust to create value and make their lives easier.
- Better customer service
- Automated reporting with 24/7 access
- Holistic advice, and
- Personal relationships with their wealth managers
Creating a meaningful value proposition is not easy, nor will it remain static over time. It is the advisors job to create that value and adjust it when necessary, or as Amazon CEO Jeff Bezos said, “We see our customers as invited guests to a party, and we are the hosts. It’s our job every day to make every important aspect of the customer experience a little bit better.”
Becoming a Guide
Wealth advisors with close relationships to their clients will naturally evolve in their roles and become trusted guides helping them to navigate life’s many unpredictable challenges. This will involve maintaining professional relationships with their clients’ other professional advisors (i.e., accountants, estate planning attorneys, private bankers and insurance advisors). Just like wealth advisors, these professionals are intimately involved in their clients’ life plans. Helping their client navigate life’s various scenarios will certainly make their lives easier and create the trust and loyalty that companies like already Amazon enjoy.
By following these simple lines out of Amazon’s playbook, wealth managers can build and retain a practice that will be more fulfilling and able to adapt through time.
As always, I am looking forward to hearing from you. Drop me a note at Michael.Welter@mikewelter.com.