Most advisors would readily agree that affluent clients are not all the same, yet it’s common practice to treat them as if they were. In other words, the advisors explain their concepts, ideas, investment approach and work methods the same way regardless of whom they’re speaking to.

This is usually detrimental. It means they are not connecting with the affluent, which means they won’t get assets to manage or meaningful referrals from family and peers.

The solution is knowing high-net-worth psychology. There is an empirically derived methodology for understanding what the affluent want from the professionals they use as well as how the wealthy think about and make financial decisions. Becoming familiar with this will help you better communicate with them.

At the center of this framework are nine personality types who want different things from their investing program.

The Nine High-Net-Worth Personalities
Family Stewards
• The point of investing is to take care of their family.
• They are conservative.
• They are not very knowledgeable.

Independents
• They exhibit drive for the type of personal freedom money makes possible.
• They feel investing is a necessary means to an end.
• They are not interested in the process of investing.

Phobics
• They avoid focusing on investing.
• Many have inherited their assets.
•They are confused and frustrated by the responsibility of wealth.

The Anonymous
• Confidentiality is their dominant concern.
• They prize privacy for their financial affairs.
• They are likely to concentrate their assets and have few investment advisors.

Moguls
• Investing for these people is another way of creating personal power.
• Control is a primary concern.
• They are decisive.

VIPs
• Investing results in social recognition.
• Prestige is important.
• They want to affiliate with institutions and investment advisors with leading reputations.

Accumulators
• The only goal they have for investing is to make money.
• They are intensely focused on investment performance.
• They are fairly knowledgeable and
very involved.

Gamblers
• They relish the process of investing.
• They are very knowledgeable and involved.
• They have high risk tolerance.

Innovators
• They are focused on leading-edge products and services.
• They are sophisticated and like complex products.
• They are technically savvy.

Let’s take a more in-depth look at each type:
Family stewards invest in order to care for their families. Most of their investment goals and financial needs will be linked to larger family issues like college funding or the generational transfer of wealth.

Family stewards often have privately held businesses, and they like to have their children work in the business. When asked what their goals are for their investments, a typical family steward might say, “Good investing lets me take care of my family.”

Independents seek the freedom to do whatever they want by achieving financial security. They may actually hold a corporate job or run a business, but they aspire to be financially free to pursue a hobby full time, travel or even start a business around their hobby—a tour company for cyclists, for example.

They often have vague financial goals that, once achieved, would allow them to pursue their dreams. That doesn’t always mean they want to retire. Simply knowing they could cut loose at any time is the liberating feeling they seem to crave.

Phobics do not like investing. They don’t know anything about it and don’t want to learn. The topic makes them uncomfortable, and they tend to be adamant about remaining unsophisticated about it.

All too often, financial advisors are intent on educating their wealthy clients about financial matters, but that’s a losing proposition when it comes to working with phobics.

Anonymous types want to be invisible. Did you ever have a wealthy client who took forever to really open up and tell you things you needed to know in order to help him? Or did you ever have one ask you why you needed his Social Security number? If so, there’s a good chance he was an “anonymous” type.
It usually takes some time before anonymous types give you much information about themselves. They feel their money is their business and no one else’s.
Moguls are motivated by power. They seek control, influence and, yes, power in their families, business, community and investments.

They find the idea of asset allocation very appealing because they can have control over their investments without having to be involved in day-to-day details. Moguls are usually big-picture people.

VIPs are status-oriented. They like prestige and the respect of others. Investing is just another means to achieve that acclaim—the psychological and social validation they crave.

Look around their offices. You’ll often find pictures of them with celebrities both national and local.  

Accumulators save more than they spend and tend to live well below their means. They don’t exhibit any outward displays of wealth and often disdain those who do. What they enjoy is watching their pile of money grow. The more they have, the better they feel.

Of the nine personality types, these people are the most focused on investment performance. The capital appreciation is an end in itself for them. They do not want the money to do anything; they just want it to grow.

Gamblers love the excitement of the market—the drama of investing, the thrill of the big win. Investing is their hobby. For some, it is work, and for a few, it is their life. Because of this, they’re much more performance-sensitive than any of the other personalities.

Gamblers are very knowledgeable, though they are not always astute. They believe it is possible to consistently beat the market and like to recount their big victories.  

Innovators, like gamblers, are extremely knowledgeable about investing, but their orientation is different. They like to be at the cutting edge of the money management field.

They like new products and services and sophisticated analytical methods. They often have technical backgrounds and might be computer programmers, engineers or mathematicians.

Communication
Knowing the types will help you change the ways you communicate with them about investing (or related matters such as estate planning). Your approach to investment management shouldn’t change, but the way you explain it to different rich investors should.

This way, the quality of your relationships can improve—sometimes dramatically. At the same time, clients will be able to understand the value you’re bringing them. That should greatly improve your business.

Russ Alan Prince is president of R.A. Prince & Associates Inc. and executive director of Private Wealth magazine.
Brett Van Bortel is director of consulting services for Invesco Consulting, the sales consulting group within Invesco Distributions Inc. The opinions expressed are those of Russ Alan Prince and Brett Van Bortel, and are based on current market conditions and subject to change without notice. These opinions may differ from those of other Invesco investment professionals.