Recently I listened to one of my tennis partners refer to his new sport sunglasses as the “Cadillac” of sunglasses. Everyone understood that he was bragging about the quality of his glasses, and a discussion on sport sunglasses followed. However, nobody thought to mention the irony; not one individual in our tennis group owned a Cadillac, including the sunglasses enthusiast — he drives BMWs.
Cadillac's fall from grace stemmed from a failure to understand the affluent consumer it was serving. Financial advisors should take heed — today's affluent are a very complex species. Couple this with the level of dissatisfaction among today's affluent investors, where 8 out of 10 would change advisors if they encountered a better alternative. The fact is, so much money is about to be in transition that understanding an investor's psychographic profile is a must.
Psychographics provide an account of a specific market segment on the basis of psychological attributes relating to values, attitudes, interests, or lifestyles. When an assessment of a specific population is created, the findings are referred to as a psychographic profile. This financial crisis has seemed to position these motivators onto center stage. It's hard to read a newspaper, watch the news or an ad on television, listen to a politician, or talk financial affairs without recognizing their importance.
Our research has enabled us to divide the boomer profile into four key affluent motivators for decision making, which we refer to as their psychographic profile. The financial crisis has simply broadened the footprint of the following motivators:
Personal Health - The stress created by this financial crisis, with family members losing jobs or trying to find employment, and by the ongoing debate about health care and insurance coverage has touched even the most affluent. People are starved for peace of mind, and worries about funding health care are creating mental static. People are making decisions about retirement, second homes and lifestyle based on personal health issues.
Family Health - The financial crisis has brought today's affluent back to basics, which translates into focusing on the importance of the family unit. Having healthy relationships with children and helping to fund the education of grandchildren have become priorities. This motivator can be viewed as sort of an expanded version of personal health; when a family member becomes ill, the entire family is affected. If a family member can't find a job or loses a job, everyone in the family feels the impact. Medical issues play a significant role in a family's overall health.
Financial Health - Very few of today's affluent are comfortable with their family's finances, which is evidenced by our research telling us that 9 of 10 would be open to a second opinion on their financial plan. The two overriding concerns of today's affluent are maintaining their current lifestyle today, and maintaining their current lifestyle in retirement.
Spiritual Health - Many of us have lost loved ones; these losses tend to be compounded by the stress created from working 60 hours a week to maintain a lifestyle. Now death benefits, tithing, and charitable work have taken on a new meaning,
As you can see, financial health is the connective tissue, the motivator that is inextricably woven throughout today's affluent psychographic profile. The hard reality is that money issues have a direct impact on both personal and family health, albeit a bit more indirectly on spiritual health.
So what does this mean to financial advisors? A lot! Your role is far more important, far more commingled into the family affairs of today's affluent than you might realize. Keep these motivators in the forefront of your mind and you'll find yourself taking a more holistic approach and getting more involved with other aspects of family finances that you might have heretofore left unattended.
This is your time! Today's affluent want you to coordinate all aspects of their families' financial affairs and, because this isn't occurring, most would welcome a second opinion regarding their families' financial health.
For those advisors who act, opportunity abounds. Those who don't run the risk of becoming obsolete.
is author of Building a Successful 21st Century Financial Practice: Attracting, Servicing & Retaining Affluent Clients.