In today's uncertain environment, affluent clients are increasingly anxious about ongoing events and developments amid the shifting political, economic and social tides. All too often, wealthy clients find the level of service their primary advisors provide to address these concerns lackluster—prompting many of those clients to seek superior advice and guidance elsewhere. For example:
• Among investors with $5 million to $9.9 million in investable assets, 14% tell us they’re considering replacing their primary advisor.
• That number jumps to 22% among clients with $10 million to $25 million.
Typically, the percentage of client attrition is much lower. That means advisors today must do more to distinguish themselves by delivering exceptional value and cultivating client loyalty. By excelling in these aspects, advisors can retain their current clients and attract select affluent individuals actively searching for superior advisory services.
Capitalizing On Rising Dissatisfaction: The Next 12 Months As A Pivotal Period For Advisors
Today’s environment allows financial advisors to substantially grow their businesses and better serve existing and future clients. As uncertainty and dissatisfaction rise, now is the perfect moment for advisors to play offense. With an astounding opportunity to attract high-net-worth prospects and generate much-needed organic growth, the next 12 months could be one of the greatest times for advisors to truly "play to win" by creating tremendous value for existing and future clients that propels their success.
That requires advisors to take proven actions informed by knowing what the affluent truly care about and want from their advisors. Empirical research combined with applied experience in the marketplace can give advisors the confidence to move forward based on what is true and effective.
The Evolving Landscape Of Client Concerns: A Closer Look
Take, for example, the key concerns of affluent clients today. CEG Insights surveyed more than 1,200 individuals earlier this year. Each respondent has a net worth of between $100,000 and $25 million, excluding their primary residence.
Here’s some of what we learned—and how advisors can use these insights to play to win.
1. Market volatility has clients questioning their future. Not surprisingly, a major concern among affluent clients today is market volatility—cited by 74.7% of respondents—while more than half (51.5%) are worried about their investment returns. The ultimate effects of these fears:
• A full 49.1% of investors are either somewhat concerned or very concerned about achieving their goals.
• 24.8% of early retirees and 23.0% of pre-retirees worry they may need additional income or delay retirement.
2. Health—and healthcare—are high priorities. Close to half (47.4%) of respondents have health concerns about themselves, and 44.6% have concerns about their spouse’s health. That translates into concerns about having adequate health insurance (43.1%), spending their final years in a care facility (48.8%), and having someone to take care of them in their old age (41.4%).
3. Taxes are top of mind. 44.6% of investors are concerned about mitigating income taxes, and 35.8% about estate taxes.
4. Family concerns range from parents to pets. Investors today share numerous hot-button issues regarding the personal and financial well-being of their family members—including:
• Ensuring that key values are passed on to children and/or grandchildren (34.8%)
• Leaving a legacy for their heirs (28.9%)
• Caring for elderly parents (25.6%)
• Ensuring that pets will be taken care of (25.3%)
5. They need help. More than one-quarter (27.8%) of those surveyed are seeking good advice and help to achieve their financial goals—indicating that the guidance they’re currently receiving isn’t up to par.
Advisors seeking to play to win must be ready to address the full range of client concerns, both personal and financial. Furthermore, a sizable percentage of investors out there view the current quality of advice they’re getting as inadequate—presenting significant opportunities for new net organic growth for the advisors who rise to meet today’s challenges head-on.
Client’s Perspective: Are Advisors Offering The Right Level Of Value?
Our research also reveals that investors have clear opinions about how well advisors meet their expectations. Overall, a little more than half (51.8%) rated their financial advisor's service as excellent—the rating that we believe is necessary for advisors to play to win.
The upshot: Nearly 50% of advisors today are not meeting client expectations in some way, potentially leaving them vulnerable to client defection and missed opportunities to grow. Given that, it’s hardly shocking that many wealthy clients are considering leaving their primary advisors.
Digging deeper, our findings (summarized in Exhibit 1) should serve as a wake-up call to many advisors today:
• Just around six in 10 investors agree somewhat or completely agree that their advisors understand what is important to them and their families, and their key concerns about money—meaning 40% believe their advisors don’t truly “get” them in these crucial areas of planning.
• Likewise, just six in 10 investors agree or completely agree that they receive quick responses from their advisor, leaving 40.0% feeling that they do not receive timely responses.
• Fewer than half (48.6%) say their advisors go beyond investment management to address their whole financial picture.
Exhibit 1: Clients’ Perceived Quality Of Their Advisors
Strengthening The Advisor-Client Bond: Key Actions To Consider
These findings leave clues—some subtle, some blindingly obvious—about what advisors who want to play to win must be doing now.
Clearly, many advisors need to focus on improving their understanding of what’s important to their clients, expanding their focus on financial issues beyond investments, increasing their responsiveness and frequency of contact, and building a better overall sense of loyalty and trust. The advisors who serve their clients extremely well right now will reap the rewards of additional assets and introductions to qualified prospective clients.
Winning Methods For Maximizing Client Satisfaction
1. Schedule financial plan reviews. Be ready to address concerns about current market conditions and their impact (real or perceived) on clients’ plans. Be prepared to discuss and accommodate clients' preferences for more conservative positioning while ensuring they align with their long-term goals.
2. Educate your clients on market volatility. Despite your best efforts, your clients are influenced by the media and may need help understanding the relationship between current events and their financial pictures. Discuss the historically uneven nature of investment returns and the value of taking a long-term perspective. Doing so will help them stay the course through volatile days.
3. Make frequent client contact systematic. Use a client relationship management platform to ensure that you are reaching out regularly. Make your discussions not only about their financial status and well-being but also their families, beliefs, occupations, medical issues—and anything else that affects their lives, their happiness and their futures. Such conversations will build personal connections that can hold you and your clients together through good and bad markets. They’ll also keep you current on big changes in your clients’ lives that could impact your planning.
Winning Methods For Building A Stronger Wealth Management Practice
1. Add advanced planning capabilities. Increasingly, affluent clients want help with taxes, wealth transfer and protection, and other issues outside traditional money management. Adding these services can be done in-house or by assembling a network of experts in various areas (accounting, estate planning) who can assist your clients. You may also need to enlist a life insurance agent, a personal lines specialist, an asset protection specialist and other professionals based on your clients’ needs.
2. Create advanced plans for appropriate clients. Work with your experts to develop an integrated plan addressing advanced planning concerns. Incorporate consideration of the advanced planning tasks previously discussed. The better your knowledge of each client’s financial and personal life, the more on-target the recommendations in these plans will be.
3. Update existing plans. New or current clients may have estate plans or other advanced planning strategies. However, many of those plans probably haven’t been revisited in years—and may be outdated. By evaluating clients’ old plans and updating them as needed, you bring demonstrable value to their lives and reveal yourself as a proactive, trustworthy advocate for their best interests.
Time For Action: Embracing Today's Wealth Management Opportunities
We are living in uncertain times. The good news: The greatest time for financial services firms to go all-in and differentiate themselves is when uncertainty reigns. Most will not confront today’s challenges, however—and they will fail to capture some once-in-a-career opportunities to generate significant organic growth while serving their current and future clients better than ever before.
The key is to show up committed to lead and be ready to play to win. Embrace this extraordinary opportunity to set yourself apart in the market and tap into the growth potential that beckons proactive advisors. By taking proven action steps rooted in the best insights, you can position yourself and your firm to fully capture the many opportunities others will miss—and gain a lasting competitive edge.
George Walper and Catherine McBreen are managing principals with CEG Insights (formerly Spectrem Group), leading innovators in wealth management research. Dive into our exclusive insights and strategies with our latest "Play to Win" Report. Unlock Your Path to Success – Download Now!