Your Year of the Affluent

The coming year will bring forth unprecedented opportunities to attract wealthy clients. In 2005, an estimated 17.4 million U.S. households will have annual incomes exceeding $100,000. Further, the number of millionaire households, which jumped from 3.3 million to 3.8 million between 2002 and 2003, is expected to continue to grow. High-income households are, in fact, expected to grow at a faster rate

The coming year will bring forth unprecedented opportunities to attract wealthy clients. In 2005, an estimated 17.4 million U.S. households will have annual incomes exceeding $100,000. Further, the number of millionaire households, which jumped from 3.3 million to 3.8 million between 2002 and 2003, is expected to continue to grow.

High-income households are, in fact, expected to grow at a faster rate than households in general. Among the three-quarters of a million people marketing themselves as financial professionals, only a small percentage are armed with the full range of competencies required to capitalize on this affluent opportunity. These numbers mean that through the entire high-net-worth spectrum, opportunities loom large.

Have the Skills

The best opportunities are available only to those who can pass the scrutiny that will be imposed on them by most affluent prospects. Most of the affluent people you will target are not those who have inherited wealth — old-money types willing only to associate with “their own.” Rather, they are generators and earners of wealth, many of whom have emerged from middle-American backgrounds to acquire first-generation wealth. Our June research focused on exactly that group of self-made affluence: 22.4 percent were business owners, 25.9 percent were self-employed professionals and 44.9 percent were highly paid executives and commissioned employees (salespeople).

Being self-made, these affluent clients typically work 60 hours per week or more, which gives rise to an important aspect of marketing to this group: Self-made types tend to be stressed out. Indeed, a recent American Express/Roper survey reported that 66 percent of affluent Americans experience high levels of stress — outranking the stress levels reported by rich people in the 11 countries surveyed.

I Can't Stress Enough

High levels of stress take a psychological and physical toll on everyone, and understanding the way different people deal with it can help an advisor tailor his sales pitch and his services. Some hard-chargers take pride in being able to handle high levels of stress. These people will talk about all of their responsibilities, the number of people that depend on them and the projects that only they can oversee. Do not mistake this as a cry for sympathy. These people are trying to impress you, so be impressed.

Other affluent individuals are in a state of stress denial. Rather than brag about the stress in their lives, they simply accept it as normal. An advisor to this type of client should find subtle ways to ease their stress. If he does his job, the client will gradually recognize the advisor as a value-add in his life.

Many clients are able to recognize their excessive levels of stress and understand that left unchecked they can be harmful. They attempt to deal with this through counseling, self-help books, yoga, exercise and the like. These clients are likely to be receptive to overt overtures involving stress-reducing tactics.

In addition to looking for simplified financial lives, wealthy prospects want an advisor who:

  • Is proactive in contacting them regarding upcoming tax and other changes that might impact their portfolio.

  • Clearly understands their goals and family circumstances.

  • Uses experts in other financial areas.

  • Helps select the best asset mix for their portfolio.

  • Helps create a formal financial plan.

  • Helps coordinate and organize all their financial documents.

  • Coordinates and integrates investment decisions.

All of this must be executed with the highest level of professionalism and topped off with a personalized touch. Not an easy charge — but the rewards are there for the taking.

Writer's BIO: Matt Oechsli is author of Building a Successful 21st Century Financial Practice: Attracting, Servicing & Retaining Affluent Clients.
oechsli.com

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