Using high-net-worth psychology enables you to better understand and communicate with affluent clients and prospects. This regularly translates into an ability to, most importantly, do a better job for these investors, but it also results in significantly more business for you.

There are times when an affluent investor’s high-net-worth personality is so pervasive it’s impossible to miss. However, as this isn’t always the case, we developed the Profile Diagnostic System. Basically, the Profile Diagnostic System is a series of open-ended questions you ask the affluent investor. The answers to these questions enable you to zero in on his or her exact high-net-worth personality through a process of elimination.

The PDS is comprised of four open-ended questions, as well as a few follow-up questions. What makes this system so effective is not so much the questions, but rather that advisors will see the unmistakable traits of one of the nine high-net-worth personalities.

Question No. 1: What Would You Like Your Investments To Achieve?
Family stewards are affluent investors whose primary life motivation is to protect their families in every way possible, including financially. So if you ask the question of family stewards, you will hear all about what they would like their money to do for their family, ranging from funding the college education of a child or grandchild to taking care of an elderly parent to estate planning that ensures a harmonious division of assets for their children.

Independents will answer this question at the other extreme. Independents seek just that—personal independence. Their portfolio buys them personal autonomy, or freedom, the thing they value above all else. If you ask the question of independents, you will hear about their dream house on the golf course or about their sailing around the world or about their being able to retire at 55. Listen carefully, though, because the theme of freedom and independence is not about personal possessions.

Question No. 2: When You Think About Money, What Concerns, Needs Or Feelings Come To Mind?
The word “accumulate” or its synonyms will smoke out the accumulators. They are singularly focused on one goal—accumulating more assets. Accumulators are not particularly concerned about what can be done with their money; they are driven to accumulate it. Hence, their answer will be something like, “I just want my money to grow as quickly and safely as possible.” They may have a specific long-term goal in mind, like $5 million by age 60.

Moguls and VIPs are interested in money because of what it can do for them. Moguls value money because of the power it gives them. They like to control people and environments around them. More money enables moguls to have more things move their way. They tell stories of affiliations and friendships with powerful people. Also they see themselves as power figures holding considerable authority in their families, businesses and communities.

VIPs are status oriented. They like to be recognized and acknowledged. They like prestigious surroundings and trophy possessions. They tell stories of interactions with celebrities. They are interested in what money can do for them, but their examples will focus on material possessions: a wonderful new house, fabulous trips, a new boat. VIPs invest for what money can buy and the lifestyle it can confer.

Question No. 3: How Involved Do You Like To Be In The Investing Process?
The question is extremely effective in identifying phobics, gamblers and innovators.

Phobics dislike investing; they are scared of it and highly intimidated. When you ask them a question like this, you will hear a lot about how they do not like investing and how they are burdened by it—how it’s one more thing they have to do or worry about. Either that or they will change the subject entirely.

Ask the question of a gambler or an innovator, and you will hear enthusiasm and commitment. They like (some even love) investing.
Gamblers and innovators are by far the most knowledgeable and expert of all, and this knowledge will come across in their answers.
Listen closely to tell the difference between gamblers and innovators. Gamblers live and breathe investing. It is their hobby and sometimes their life. Gamblers love the thrill of market volatility.

Innovators are not taken by the thrill of investing but by the intellectual challenge of it. They are technically sophisticated and like to be at the cutting edge of the investment world.

Question No. 4: How Important To You Is The Confidentiality Of Your Financial Affairs?
Just about nobody is going to say confidentiality is not important. Of course it’s important to pretty much everyone, but only the “anonymous” investors are rabid about this issue. Hence, the question is designed to identify only that one particular high-net-worth personality.

Anonymous investors are fearful and worried about personal security and confidentiality. They need constant assurance that you are protecting the integrity of their information as well as their investments. Ask this question of the other personalities and you won’t get much of a response. Sure, they want their dealings to be confidential, but they are not singularly focused on this issue. But anonymous types will explain how central this concern is to them and how essential it is to any of their advisory relationships.

Confirming High-Net-Worth Personalities: The Trial Balloon
Once you believe you know which profile an affluent investor may possess, consider floating a trial balloon to see if you are on target. That way you can confirm your assessment and proceed accordingly—or, on the other hand, disprove it early and avoid a misdiagnosis.

Creating these trial balloon questions is relatively easy. Take the following examples:

Family stewards: “It seems your family’s well-being is our primary concern. We’re going to create a portfolio that’s focused on your family, that’s going to really take care of them in the long term. Is that your goal?”

Phobics: “I get the feeling you’re not comfortable with investing. Is that true? … That’s OK because I am, and I’m going to do my best to make sure your goals are met so that you don’t have to worry.”

Independents: “It’s really important to you to have the investment resources to make sure you can do what you want. From talking to you, I sense that what you want is the freedom to do whatever you like. Maybe retire at 55, and pursue some hobby or interest. Is that right?”

The Anonymous Client: “You operate similarly to the way I work with my clients. My key concern is that confidential information stays confidential. When we work together, you can rest assured that confidentiality is one of my highest priorities. What do you think?”

Moguls: “I feel that you want to be in ultimate control of everything we do together. My job is to make sure that you have the best advice and information in order to make the big decisions. Is that right?”

VIPs: “It’s important that you know we work with some of the biggest names in the investment management industry. People at the same level that you are. People who understand the appropriate investments for someone in your position. How do you feel about that?”

Accumulators: “It seems to me that you are very astute about money. You know how to save it and how to make it grow. I enjoy working with clients like you and I’m going to do my best to make sure we create an investment strategy to make the most money possible. Are we on the right track? Is that what you want from an advisor?”

Gamblers: “Investing is exciting for you, just like it is for me. I love everything about investing. Whether it’s finding a great stock or doing research on financials. Together, we can make sure you keep up with all the events going on. I sense that your ideal advisor is one who is as excited about the process of investing as you. Am I right?”

Innovators: “You have a great deal of knowledge about investing, and it’s very important to you to use state-of-the-art investment approaches. That’s precisely what my firm and I specialize in. Is this the way you want to go?”

Conclusions
The power of high-net-worth psychology to empower you to be more client-centric as well as more professionally successful is not debatable. However, critical to achieving these goals is being able to accurately determine the high-net-worth personality of an affluent investor.

To enable you to ascertain an affluent investor’s high-net-worth personality, we developed the Profile Diagnostic System. The core of the system is four questions. Additionally, once you have determined an affluent investor’s high-net-worth personality, it’s wise to confirm your judgment by using trial balloon questions.

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.