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Client Relationships – Art or Science?

by | Jan 20, 2021

In HBO’s guilty pleasure drama “Industry,” Robert, the young equity sales associate, is standing up on RiF day to present to senior management of the fictional Pierpoint Bank.  When asked “What is the most important thing you have learned about client relationships?” he responds, “A big night out with a client is worth 1,000 research reports.  Whether you like it or not, it’s a belly-to-belly business even though this job could be completely automated.” Cue the dramatic music and zoom in on the old school head of FICC who nods his head approvingly. 

Ok, we know this is only COVID-19 bingeworthy entertainment, but the question remains what does it mean to manage a client relationship in today’s real-world with access to excessive information, abundant liquidity and multiple venues to trade?  In fact, is managing a client relationship more science than art?  Truth lies somewhere in between where there is an art to managing the people side of the business, but the science side of the equation is critical to maintain an edge in managing an institutional client relationship in capital markets.  

Looking at the art side of the equation, the first definition of a client according to Webster’s Dictionary is “one that is under the protection of another” which connotates words like trust and dependency.  With trust and dependency comes loyalty where today rainmakers still bring their clients over from one bank to the next.  And by the same token, a loss of trust can put you in the penalty box, or worse you lose that client forever.  Ultimately, people still do like to buy from people so long as there is trust and that the salesperson is dependable.

The challenge is that building trust takes time and there is less time to apply your art today, so you need science to accelerate your trust building and show that you are dependable to your client.  To further compound the problem, the number of accounts that you cover increases every year.  You not only need to be first to call, but first with the right call, not just so you stand out from the crowd, but so you can actually be digitally efficient to make several first calls across the right clients.  Blasting on Bloomberg Chat may be quick and easy but that is what the crowd relies on.

To stand out, you need to have the right call and I find myself going back to the art of “know your client”, not in the KYC regulatory sense, but do you have a 360-view of your client?  Let’s understand what a 360-view means.  From the client’s perspective, the simple expectation is that you would have a complete view internally of all the business they have with your bank.  Simple right?  For hedge funds being serviced by Prime Brokerage its easier by design, but for corporate customers it is impeded by the ethical wall separating markets from investment banking and then by silos created between corporate lending and other banking activity from capital markets.  The panacea is being able to then connect wealth management to the C-suite of the institutional clients. 

No matter where you might be in your journey to get a 360-view of your customer inside your bank, the science says you need the data.  As a CRM provider that appreciates these varied needs, we will say “what better place to put the relevant information into one system?” so when you pull up your client record you can see all their interactions by different lines of business.  When you get to this position, then any added insights about what your client is doing outside of the bank gets you way ahead of the crowd and you accelerate the building of trust so not only will you be the first call, you will be the best call.

And to be frank, no bank wants rainmakers walking next door with their client knowledge in their heads and not institutionalized in a CRM.  Banks need their clients to build strong relationships with the institution not an individual salesperson.  The drive for analytics and automation goes beyond improving efficiency. It also drives the science in the client relationship.  On the flip side, the client has evolved as well.  Clients today have much more access to information, their own analytical models and tools that, thanks to the Cloud, are readily available – not just reserved for sophisticated quants on the sell-side.  This next generation of client also might prefer a relationship building at Soul Cycle instead of steaks at Sparks.  So, even those that pride themselves on being a bit “old school” in relationship management, the science of data, technology and automation will help you, if nothing else to manage more relationships more efficiently – and ultimately to maximize each relationship.  Just make sure you keep your T&E below the regulatory amounts when you decide to go “belly to belly”!

Contact us to learn more about Tier1’s client relationship management and workflow solutions for capital markets and investment banking, or to request a Tier1 demo.

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