Despite the genesis of Net Promoter Score (NPS) being more aligned to predicting market share of supermarkets, more and more financial services providers seem to consider it the holy grail of KPIs, and one which shows no sign of disappearing anytime soon.
What is a reasonable benchmark for the wealth management industry?
I’ve spent more than 13 years working with private banks and wealth managers, supporting them on their client engagement (customer satisfaction) programmes, which are increasingly including NPS as the KPI.
What NPS score should we strive for?
The question I am asked more than any other is “what NPS should we be striving for?”. Whilst we know that in theory, NPS can range from -100 to 100, what is a reasonable benchmark for the wealth management industry?
It’s important to understand that the terms private banking and wealth management – even investment management – are used broadly and interchangeably in the industry. You can bank with some wealth managers but not with some private banks. Some private banks offer wealth management services, but not all.
So firstly, it’s best to ascertain the type of relationship individuals have with the organisation. Banking? Advisory? Discretionary? As this can – and does – impact the strength and closeness of the relationship. Those who use private banks for their everyday transactional banking needs can have regular and frequent contact with their main contact, and every touchpoint is an opportunity to strengthen that bond. On the other hand, High Net Worth Individuals’ (HNWIs) who have their assets invested via a discretionary mandate may only have contact once a year, if that.
Secondly, not all clients are equal. Expectations vary depending on cultural or market norms, on their total investable assets and/or Assets under management (AUM), the tenure of their relationship. And of course, age and gender continue to play a significant role (with older HNWIs and women typically scoring more favourably).
Whilst all our clients surely want to strive for an NPS as near to 100 as possible, what is a reasonable target? To answer this, we’ve looked back to see what the overall range has been, and to see if there are any factors other than those outlined above which may affect this.
The lowest ever NPS we’ve seen for an individual provider in the wealth management space is 11 – this is on a global level, combining scores across Americas, EMEA and APAC. And scores do vary considerably by market, even for the same provider. In the UK, the lowest NPS we’ve ever seen for a given provider is 22.
Since we’ve been tracking it, we’ve seen NPS for individual brands range from a low of 11 to a high of 77, with a mean of 39 (and a median of 36). Over the past three years, the mean has fallen slightly to 38.
We therefore tend to advise clients that a target NPS of 40+ is what they should consider an acceptable minimum. But that scores in the 70s are indeed possible.
Some assume that the market conditions are a key determinant of the scores, but we haven’t found sufficient evidence to support this. In fact, an organisation’s NPS can be high even when markets are tanking if the relationship is strong and client expectations are being managed through proactive and transparent communication.
(The above data is all based on NPS for the ‘organisation’, rather than their main contact. We typically find satisfaction and advocacy (actual or propensity) are higher for their main contact than the organisation, given the personal nature of most of these relationships).
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