How Financial Firms Can Retain High-Net-Worth Investors

How Financial Firms Can Retain High-Net-Worth Investors

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).

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