It is more often the case, as the markets move steadily up, that the wealthy stay loyal to their financial advisors. Their portfolios are growing and they are more often than not fairly content with their investment performance. However, as of late, the wealthy are concerned and more than a bit anxious.
Market swings of 1,000 points on the Dow Jones index, for example, tend to make many of the wealthy uneasy. Proclamations from politicians and companies only seem to be adding to their confusion and fretfulness. With no end to the rollercoaster ride in sight, coupled with the prospect of a real economic downturn, the wealthy are becoming increasingly circumspect when it comes to their financial advisors.
The consequence is that the wealthy are more willing to shift their loyalties and move their business from their current financial advisor to another one. These are a couple of the issues:
• How do you protect your practice and avoid losing affluent clients?
• How do you benefit by cultivating more affluent clients—in effect, taking them from other financial advisors?
Protecting your practice: Based on the research, the stronger your rapport with your wealthy clients, the less likely they are likely to leave you or take assets away. By taking steps to build stronger rapport, you can certainly better safeguard your clientele. For instance, a deep understanding of an affluent client’s world view, especially his or her critical concerns that extend beyond money management, proves to be very effective in helping to keep clients, even if their portfolios drop significantly.
Providing wealth management expertise, whether directly or in conjunction with third parties, is a powerful way to build stronger bonds with the wealthy. By helping the affluent address a variety of financial and legal concerns, you are further cementing your relationship, giving you time for their investments to do better.
Along the same lines, helping the wealthy with matters outside wealth management can be very effective in ensuring they stick with you. Being able to recommend concierge physicians to the wealthy who have health issues is often a potent way to create stronger relationships.
Capturing new wealthy clients: Client referrals tend to drop during turbulent market times. Clients are usually less inclined to make referrals when markets are in flux. One the other hand, referrals from centers of influence, such as accountants and attorneys, usually significantly increase.
The wealthy who are questioning the value provided by their financial advisors are more likely to ask the other professionals they work with for their opinions and introductions to financial advisors. However, to most efficaciously capitalize on this trend, you have to create strategic partnerships with centers of influence. The most effective way to establish and maintain strategic partnerships with centers of influence is to help these other professionals grow their practices.
Taking actions: When markets are on a rollercoaster or going down, it is common for many financial advisors to lose wealthy clients. You can avoid this scenario and even grow your practice provided you take smart proven actions.