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Financial advisors once enjoyed long-term relationships with their high-net-worth clients, and rarely had to worry about losing them. This isn’t the case anymore.
According to research from PwC, nearly half (46%) are planning to either change wealth management providers, add new wealth management relationships or do both in the next 12 to 24 months. This behavior is even more pronounced among younger investors (18 to 34).
“This isn’t just happening in the wealth space,” said Greta Lovenheim, Customer Data and Analytics Principal at PwC. “Across sectors, younger consumers are seeking out much more personalized and digitally enabled experiences.”
To successfully retain these clients, and capture new money in motion, firms should curate a tailored ecosystem of products and services, Lovenheim explained.
Expand Service Offerings
The survey found that nearly two-thirds of respondents said they receive “value add” services from their primary provider. However, many investors said they’re also interested in receiving adjacent services such as tax planning (47%), trust and estate planning (46%) and health/elder care (35%). Firms should keep this interest in mind when reaching out to their clients.
It’s also important to assess client servicing needs across different personas. Business owners have indicated a desire for succession and family planning services, while equity compensation planning may help investors in the accumulation phase of their careers.
“Firms should consider what topics investors would appreciate advice about from their advisor or provider,” Lovenheim said. “What is on their minds that fits in with the credibility of an advisor?”
While wirehouses and larger firms have an advantage in providing a variety of services to clients at scale, smaller practices may need to outsource, collaborate, integrate external service providers or provide asset aggregation to some clients.
Embrace Non-Traditional Assets
Doubts still persist about non-traditional assets such as alternatives, cryptocurrency and Environmental, Social and Governance (ESG) investing. Yet high-net-worth investors are still interested in them. Over a quarter (27%) of the respondents who have made a change in the last three years indicate that they did so because their new provider offered access to different products and services. Firms that can provide access and support adoption of non-traditional assets stand to retain and improve share of wallet with these clients.
“Despite any doubts, firms need to be able to have a proactive, knowledgeable discussion with clients on these subjects, and give them advice,” Lovenheim said.
Firms that can offer a robust product shelf, invest in an alternatives platform, cultivate research and train and equip advisors to offer tailored recommendations can position themselves to capture held-away alternative assets.
Enhance Personalization
Two-thirds of high net-worth individuals said they want more personalization in their wealth management relationships, particularly in financial planning and investment strategy. Only a third are satisfied with the level of personalization they currently receive.
To inform planning and investment conversations, advisors should better understand their clients’ career, lifestyle, family dynamic behaviors, propensities and attitudes (in addition to basic demographics and goals).
Here, a Customer Relationship Management (CRM) system can help. “Knowledge is power, and a single-instance CRM that can integrate with the tools and resources advisors use gives them insights at their fingertips during every client interaction,” Lovenheim said.
Expand Your Digital Footprint
Virtual meetings and experiences are now ubiquitous following the pandemic and proliferation of remote work. The majority (80%) of respondents say they prefer digital or voice channels to communicate with their wealth management provider, meaning advisors should become digitally enabled to continue to deliver cohesive experiences.
These high-net-worth individuals are also “very comfortable” (59%) with hybrid advice delivery, or engaging remotely with a pool of financial advisors rather than a single, dedicated advisor. As a result, firms may need to rethink branch-driven models in favor of virtual service, and upgrade rudimentary digital experiences to better appeal to investors aged 18-34.
“They need the tools, in terms of virtual collaboration, to be able to serve clients the way they prefer, and that are tailored to their specific circumstances,” Lovenheim said.
Conclusion
Although today’s investors are less loyal to a single financial advisor, firms can still hold on to them – and attract new high-net-worth clients – by adding new services, helping them explore non-traditional assets, improving personalization and upgrading digital capabilities.
These actions can also help attract the next generation of high-net-worth investors, which will become critical for firms in the future.
“Younger investors are ultimately going to be the core of your client base,” Lovenheim. “They aren’t today but they will be.”
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