4 Keys to Attracting HNW Clients

Feb 26, 2024 / By Debra Taylor, CPA/PFS, JD, CDFA
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Two new surveys of advisors and wealthy investors point to gaps in what financial services firms offer and what their clients want. Here are four takeaways that can help you differentiate yourself and attract high-net-worth clients.
Editor’s note: It’s not too late to join Debbie’s Build a Better Business workshop, with another session on February 27.

Understanding and meeting the needs of high-net-worth clients is the key to success in the wealth management industry. The insights below summarize the four key points from a CEG Insights report along with a few highlights from the Herbers & Co 2023 Service Market Growth Survey.

The CEG Insights report looks at responses from more than 750 advisors while the Herbers & Co study results were taken from 1,600 consumers and more than 700 financial advisory firms’ responses. Both studies sought to compare what investors want versus the services the industry actually offers. In addition, the studies highlight the strategies and trends that allow some firms to grow faster than others.

Work with your team to implement the four strategies below to attract, convert and retain more high-net-worth clients than ever before.

#1: Differentiation is key to attracting prospects, but advisors don’t do it well or enough

Demonstrating a unique value proposition is critical to attracting prospects to your firm. Differentiation provides a competitive edge, resilience against industry pressures, and improves client experience.

Even though an advisor may think she differentiates in the marketplace, the CEG report shows that most advisors don’t differentiate nearly enough.

The report found that the most common differentiators used by advisors include financial planning services (58% of advisors), level of customer service (55%), comprehensive services (54%) and years of experience (51%). While great things to have in business, these differentiators are not giving you enough of a competitive advantage to truly stand out.

Creating exclusive and innovative offerings allows an advisor to further differentiate her services and stand out against competitors. Some examples of specialized services include

  • long-term planning,
  • family financial education,
  • cryptocurrency advising,
  • and charitable planning for high-net-worth clients.

Further innovative services like virtual family office service, entrepreneurial services for business owners, real estate advisory, and succession planning can help meet even more tailored needs for higher net-worth individuals.

Similarly, the Herbers & Co study found that the top organic growing advisory firms were more comprehensive in their service offerings.

The study showed that the more services an advisory firm had to help the client, the faster they were growing organically.

Offering these exclusive and innovative services not only meets the unique needs of high-net-worth clients but also provides a significant competitive advantage in the marketplace for your firm.

Bottom line: What is your unfair competitive advantage? What are you and your firm really excellent at? Make sure to highlight it.

#2: Clients are interested in more services, but they aren’t getting them

The CEG report shows that the largest gaps in wealth management exist in tax planning, estate planning, wealth protection planning and charitable planning services.

Data shows that at least 70% of wealthy investors desire these services, however, for each of these respective categories, less than 25% of wealthy investors receive these services from their advisors (even when these services are offered by the business).

This indicates a clear delivery gap where clients are interested in more services offered by their advisors, but they are not accessing them.

This data is echoed in the Herbers & Co study where she found that tax planning was the top service consumers with more than $250,000 in household assets want. Ninety percent of consumers in this category named tax planning as a service they wanted. In fact, tax planning was one of the only services, out of the 10 services the study looked at, where demand for the service outpaced the percentage of advisory firms that offered it.

Bottom line: Both studies clearly show there is a lot of room for advisors to gain clients by meeting their clients’ growing demand for retirement planning, tax planning and estate planning, among other services.

#3: Client-generated referrals are pivotal

Understanding the impact of client-generated referrals on yearly business metrics is pivotal for advisor businesses. In fact, clients are identified as the most significant source of referrals, accounting for about 36% of all referrals received by advisors. On average, advisors receive about 29 referrals per year from their top 20 clients, highlighting the importance of maintaining strong client relationships.

The CEG study shows that after client referrals, accountants (10% of all referrals), friends and family (9%), and investment bankers (8%) are the next largest sources for referrals.

An emphasis on service and client experience should be a top priority for business growth.

Through continuously focusing on and improving the service model and client experience, it follows that growth will occur organically.

Bottom line: Studies repeatedly demonstrate that clients will pay the 1% AUM fee, but they are looking for additional services. Are you doing all you can do in this important area?

#4: Websites are significant drivers of new business, but not in the way you may think

Surprisingly, most new website business is likely the result of client referrals, not cold searches. The CEG report shows that websites have a varied impact on business with 10%–24% of new business coming from websites for almost a third of advisors, 25%–50% of new business is website-driven for over a quarter of advisors, and a tiny 6.3% of advisors attribute half or more of their new business to their website.

Given the referral-driven nature of web traffic, advisors should consider integrating their website into a broader client referral strategy.

Your website needs to be part of your referral strategy, and thankfully there are many ways to accomplish this. Use your website to advertise your business by going beyond boilerplate messaging and instead curate content with your target client in mind. What would that target client want to see and how can you cater to them? By reviewing the website with the eye of a prospect who was referred, the advisor may decide to include recent blog posts, newsletters, and even client event information.

Bottom line: In essence, consider the website as part of your business development strategy as opposed to a siloed marketing channel.

Understanding what affluent clients seek and how to align services to meet their needs will give you a competitive advantage over your peers. Implementing these insights isn’t just about growth, it’s about transformation. You are sure to stand out in the industry by addressing these areas commonly overlooked by others while developing enduring client relationships as the foundation of sustained business growth.

Debra Taylor, CPA/PFS, JD, CDFA, is Horsesmouth’s Director of Practice Management. She is also the principal and founder of Taylor Financial Group, LLC, a wealth management firm in Franklin Lakes, NJ. Debra has won many industry honors and is the author of My Journey to $1 Million: The Systems and Processes to Get You There, a book about industry best practices. Debbie is also a co-creator of the Savvy Tax Planning program and co-leader of the Savvy Tax Planning School for Advisors. Several times a year she delivers her Build a Better Business Workshop for advisors.

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