5 Ways to Win the Battle for Clients’ Assets and Loyalty – The Preeminent Financial Advisor Podcast – Episode 59
The battle for new assets and ongoing loyalty isn’t going to be won based on the investment results you deliver. Instead, the advisors who win will be those who become indispensable in their clients’ bigger-picture lives—and the lives of their clients’ heirs.
That’s what we’ve concluded based on CEG Insight’s latest study of nearly 1,300 investors with a net worth of between $100,00 and $25 million. Going forward, there are five key imperatives that advisors should focus on:
- Become indispensable in life’s defining moments.
- Advise for the 100-year life.
- Offer alternative investments and digital assets.
- Build relationships with the next generation.
- Navigate volatility and emotions.
Advisors who master these five areas will put themselves in the strongest possible position to build rock-solid client loyalty and capture assets from ideal prospects seeking a better experience.
1. Become indispensable in life’s defining moments. When clients experience life’s defining moments and transitions—including inheriting wealth, experiencing a divorce, selling a business—they tend to look at everything with fresh eyes. And that includes their existing advisory relationships.
Example: Nearly half (46.1%) of investors look to switch advisors within three months of a major life event.
Life transitions create immediate pressure points where the advisor-client relationship can either strengthen dramatically or break entirely. That means you need to be aware of the key life transitions your clients will be facing and position yourself as the go-to expert to help them navigate the situation—well before the event occurs. If the transition is sudden (a divorce, for example), you need to be able to respond quickly with support and solutions.
• Position yourself as the transition specialist. Create and use case studies as proof points that demonstrate your firm’s specific expertise in various life transition moments.
• Add a premium “concierge service” for transitions. Clients in transitional moments want their advisor to provide immediate access, enhanced communication and specialized expertise for their specific circumstances. What’s more, 16.8% of wealthier clients are willing to pay 16% – 20% more for enhanced access. Depending on your client base, consider formalizing high-touch support as a premium offering.
2. Advise for the 100-year life. Today’s clients (especially younger and wealthier ones) expect to live decades longer than previous generations did. For example, more than 50% of Gen Z and Millennial clients expect to live to 100—a belief that’s also shared by many of the very wealthiest investors. One implication: Rather than simply asking, “How much money do I need to retire?”, they also want to know, “What will I do for the next 30 to 40 years?”
What’s more, people’s biggest concern about living longer isn’t financial. Instead, it’s cognitive decline, cited by 30.7% of investors (with 13.6% worried about becoming a burden on their families.) Just 12% are worried about outliving their assets.
The upshot: Your planning must address greater longevity, particularly for certain cohorts—and not just financially but also in terms of physical and mental health as well as meaning and purpose.
• Train yourself to guide conversations about purpose and meaning. Focus on positioning yourself as a life guide who can address both financial security and personal fulfillment.
• Create a premium “longevity planning” service for select clients. Develop a stand-alone service to advise clients beyond traditional retirement planning—such as extended cash flow modeling (up to age 100) and introductions to vetted health and wellness professionals.
3. Offer alternative investments and digital assets. While older, more traditional clients remain hesitant about private markets and digital assets, younger generations of wealth creators and inheritors consider these types of assets to be core portfolio components.
Consider that 41.6% of Millennials have 10% or more in private markets, while 89.5% of Gen Z investors have at least some crypto in their portfolios.
• Create a vetted alternatives platform. Build a centralized approach that offers pre-screened private market opportunities and digital assets..
• Train yourself on alternative investments. Focus your education on specific products and their characteristics, how alternatives fit into overall portfolios, risk management strategies and client suitability requirements.
• Provide managed access to digital assets. Provide a way for clients to access digital assets through you.
4. Build relationships with the next generation. Just 8.6% of investors heavily involve their heirs in current discussions about family wealth. But 44% of investors say they plan to provide complete financial transparency to their heirs within two years. That gap is where you lose the client. You need to bring the client and the children into the discussion with the client and you need to be responsible for it.
You’ve also got to clearly understand expectations and how they shift between generations. Advisors’ current clients often care a lot about performance, and so advisors assume the kids do, too. And while that’s true, younger investors also prioritize things like digital experience, transparency and values alignment. And they crave education, especially about financial literacy. Also, tax planning is really important to them.
Increasingly for advisors, “the client” is no longer an individual; it is the entire family unit. Your advisory model must evolve to reflect this reality, transforming from a single-generation service offering to a multi-generational consultancy.
• Create education programs for clients’ children and grandchildren. Create structured programs to engage the next generation directly. Develop financial literacy workshops, investment education sessions and networking events specifically for your clients’ children and grandchildren.
• Develop comprehensive family wealth plans. Move beyond traditional investment policy statements to create detailed family wealth blueprints that include a family’s values, legacy goals and governance structure.
5. Navigate volatility and emotions. Investors need help managing their emotional reactions during periods of stress, even if they don’t realize it. For example, fewer than 10% of investors think they’re susceptible to some of the biggest emotional pitfalls that exist—such as overconfidence, anchoring, recency bias and the fear of missing out.
The upshot: Use market stress as an opportunity to demonstrate value and strengthen relationships rather than simply weathering the storm.
• Prepare clients for volatility. Start preparing clients for volatility during initial meetings. Clients who understand what to expect are less likely to panic when volatility occurs.
• Offer behavioral coaching as a premium service. Position such behavioral guidance as a way to help clients make smart money decisions. Provide premium behavioral coaching by offering more frequent one-on-one sessions for clients wanting intensive guidance during volatile periods.
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