Straight From the Affluent: 7 Key Findings From Our HNW Investor Panel – Episode 56
At our most recent mastermind event, we assembled a panel of affluent individuals, each with a net worth of at least $5 million. In front of 150 financial advisors, we asked them about how they invest, their impressions of their advisors, preparing their heirs for being wealthy, and other hot-button issues on their minds.
Their comments were candid and sometimes surprising. But most of all, they were actionable for advisors. Here are 7 lessons we learned from this HNW group:
- Focus on entrepreneurs. The majority of the panel members generated their wealth through business ownership. That tracks with previous CEG Insights research showing that advisors’ wealthiest clients tend to be entrepreneurs or former entrepreneurs who have sold their companies.
- Don’t confuse rapport with retention. By and large, panel members said they liked their advisors. But when the discussion turned to whether their advisors were providing them with all the services they want, many members were less than enthused by their advisors’ efforts. The upshot: Your clients might think you are a nice and enjoyable person, but they might not feel you’re delivering enough financial value. Of course, that puts you at risk of losing those clients to advisors who go the extra mile.
- Engage in unscheduled communication. In between quarterly meetings or annual reviews, reach out to clients. See how they’re doing in general. If markets are volatile, check in on clients’ moods. The panel members said it’s these off-schedule contacts that make them feel that their advisors truly care about them as people. As one panel member said, “When my advisor calls me just out of the blue, it just makes me feel like I really matter.”
- Coordinate with other professionals. Panel members loved the idea of their advisors working with their CPAs and other financial professionals to coordinate their financial lives. The problem: Most of the panel members said either their advisors don’t do this, or they weren’t sure whether their advisors engaged in that coordination. Working in close consultation with clients’ other professionals is a hugely appealing value proposition among the affluent. If you’re not doing this, get going. If you are, make sure your clients understand that you’re taking this key step on their behalf.
- Reach out to clients’ heirs. Among the panel members with children, most wanted their advisors to reach out to their kids and work with them to help instill financial knowledge and values. Most panel members also engage in philanthropy, and would like to see their advisors working with heirs to continue their charitable activities.
- Explain alternative investments thoroughly. Some panel members were very interested in private equity and crypto, while others didn’t pay any attention to alternatives. Among those who have invested in alternatives, the most common sentiment was that they didn’t really understand how the investments worked and the specific rules they had to follow. If you offer alternatives, be sure clients understand how they work on a deep level.
- Build relationships with COIs for referrals. The vast majority of the panel members found their current advisor through their CPA, attorney or other professional they were already working with. If you want a steady stream of qualified referrals, the most important thing you can do is build relationships with these centers of influence.
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