Financial advisors desiring to add high net worth investors to their book of business need to understand what motivates these clients to choose an investment advisor initially. Understanding that their needs and priorities are different than other clients will determine an advisor’s success in retaining them—initially and over the long term.
The word to remember is “service,” concierge-style service, in fact.
The level of service an advisor gives to these clients is more important to them than the fees charged, the office location or the brand name of the firm. Advisors should not assume that having one of the big-brokerage-house names on a business card means that they can slip-slide away on less-than-stellar customer service. They can’t.
According to a Spectrum Group Survey, two-thirds of clients with net worth of between $5 million and $25 million would change their financial advisor in a heartbeat, if phone calls and emails are not returned in a timely manner. These clients don’t have time to waste waiting for a response to their questions. If an advisor is not responsive within a reasonable time frame, they will leave and move their business to an advisor who is.
What is a reasonable time in which to respond? Within-the-hour for some clients and within-a-business-day, for others. People in general expect a reply to an email almost immediately. Let’s talk about what it means to give good “service” to this particular group of people and how advisors should adjust their routines to best manage these clients and attract more like them.
Advice must be reliable and credible
High net worth investors want quality information. They value safety and predictability in investments, both of which they can evaluate by your communication efforts. Take the time to understand and explain the nuances of the investments being recommended to them. They rely on the advisor to read the “fine print” and explain it clearly and honestly.
Review the specific risks and the benefits to the client. By analyzing and explaining a recommendation within the context of an individual’s portfolio, advisors prove that they truly understand the investment and are conveying reliable information about it to meet their long-term investment goals.
Recommendations must consider risk preferences
Since these investors are becoming more risk-averse, they want credible information about their current investments and potential investments. Clients want to understand what the future will bring and what ideas advisors have for finding new and alternative investments.
Almost 50 percent of clients with wealth over $3 million are extremely concerned about the safety of the principal in their investment. Take the time to truly listen to clients’ fears about the short and long term and ask questions to hone in on where they draw the line on risk. Then respect that line going forward.
Communication must be effective and based on client preference
An advisor should be able to effectively communicate his or her insight and expertise when making investment recommendations. Ask clients about their preferred method of communication and how quickly they expect a response.
Admittedly, it is tricky trying to balance “information overload” with providing as much information as possible to help a client make an informed decision. That’s why it is best to ask the clients what are their preferences on the volume of communication and how often.
High net worth clients deserve the attention they demand
High net worth clients are putting their trust in their advisor’s experience, ability to communicate effectively and communicate on the clients’ schedules. Contrary to how it may appear, these clients can be incredibly loyal and stick with a trusted advisor for a lifetime.
But that loyalty must be earned. Take the time to get to know the client’s individual preferences and develop a personalized service plan and follow through. These clients deserve an individualized communication plan that includes a regular portfolio review. Many clients expect that “regular” means “daily.” Others are fine with a weekly or monthly review. However, it is the advisor’s duty to understand how often to review an investment given the client’s risk profile and the client’s long-term goals.
Take a page out of a lawyer’s playbook. Schedule everything for these clients on triplicate-calendaring systems with reminders. Service and excellent communication skills are that important to them. Follow up as promised and follow through like a professional. Advisors who do will be rewarded with an excellent reputation, which of course can lead to retaining more high net worth clients like these.
Advisors build their own brands. Build an excellent reputation by providing high-quality service and good results.
