Who Wants a Wealth Manager?

Just say wealth management these days and reps snap to attention. What with the bear market limiting transaction-based income and firms pressuring brokers to annuitize their business, who doesn't want to attract affluent clients and provide them with more in-depth advisory services? First, let's quickly revisit the concept of the true wealth management advisory model: It is targeted to the high-net-worth

Just say “wealth management” these days and reps snap to attention. What with the bear market limiting transaction-based income and firms pressuring brokers to annuitize their business, who doesn't want to attract affluent clients and provide them with more in-depth advisory services? First, let's quickly revisit the concept of the true wealth management advisory model:

  • It is targeted to the high-net-worth client.

  • It goes beyond investment management to address the preservation and transfer needs of the client.

  • It requires an advisor to go beyond his or her specialization and align with other specialists in a wider range of financial areas.

Next question: Are clients equally excited? And of those who are, what characteristics do they share? Phoenix, which specializes in this market, set out to answer this and other questions in a March survey of the high-net-worth population (those with $1 million in investable income not including a primary residence).

The response? Sixty-one percent said they were at least somewhat interested. When projected against the 6 million high-net-worth households in the country today, that translates to 3.66 million families.

We also found that those expressing interest are younger than those who said they're not interested in the advisory model, suggesting wealth management has enormous potential for future growth.

Clearly, this adds up to tremendous opportunity for advisors. But, first, it helps identify good prospects, according to age and interest.

Here's a snapshot of the group:

They are younger.

  • Forty-one percent of those interested in the advisory model are under 55. Add responses from those aged 55 to 59, and support for this model jumps to 65 percent.

    They are more financially insecure.

  • Forty-four percent of those expressing interest agreed with the statement, “Lately, I've become confused about the best way to invest my money,” compared with only 24 percent of the respondents who said they weren't interested.

  • We saw another split when we asked for a response to the statement, “Lately, I'm looking for ways of getting more control over my life.” Sixty percent of those interested agreed with that statement, compared with 38 percent.

  • Of those interested in the advisory model, 72 percent feel knowledgeable about financial matters in general, less than the 83 percent of those not interested in the concept.

    They are more interested in a long-range, formal financial strategy.

  • Eighty-one percent of those who might work with a wealth manager said they like to plan their finances five to 10 years ahead, 10 percent more than those who don't support this approach.

  • Forty-two percent of those interested have a CFP as their primary advisor, compared with 16 percent of those uninterested in this concept.

  • A full 50 percent said they have a formal written financial plan, compared with 29 percent who weren't interested. Of those who had a plan, 64 percent said their CFP helped them prepare it, compared with 30 percent.

    They are much more dependent on their advisor.

  • Of those interested in wealth management, only 19 percent agreed with the statement, “I rarely seek professional advice when it comes to making major financial decisions.” This number jumps to 60 percent from those who don't think they need a wealth management advisor.

  • Only 22 percent of those who want to work with a wealth advisor said they make their own decisions regarding money and investments without consulting professionals, about one-third the number of disinterested respondents.

  • A full 77 percent of supporters said they act on or follow advice from their primary financial advisor. This number dips to 59 percent for those who don't see the need for this type of advisor.

The demand is clearly there. Glean what you can from this survey and go after prospects that fit the profile. It's not easy, but it's profitable.

Writer's BIO:
Walter H. Zultowski
is senior vice president, marketing and market research for the Phoenix Cos.
[email protected]

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