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Affluent Perception Is Reality—Where Advisors Go Wrong

Two areas where the perception gap is poised to create serious problems if left untended.

ATLANTA — “You covered a lot of ground with the research you shared,” remarked Dora and then asked, “but if you were to summarize, what do you consider to be the biggest challenges we face with our affluent clients?”

My talk referenced our two latest research projects, one on the affluent, the other on financial advisors. What has always been interesting to us with these parallel research projects (we’ve been conducting them for the past 20 years), is how the data we uncover is so interconnected.

As basic as Dora’s question might appear, it addresses a fundamental issue facing many financial advisors—a perception gap between affluent clients and their financial advisor. We have uncovered two areas where this perception gap is poised to create serious problems if left untended. 

1. Service Capabilities

This is a tough one, but whether you want to believe it or not, there’s a strong probability that your clients aren’t aware of the totality of the services you offer—they still view you as you were when you first started working with them. The result: they don’t know your true capabilities. Only a couple of weeks ago during a Q&A following my presentation, an advisor shared his pain over an affluent client he’d worked with for over 20 years leaving him for a financial planner.

“I thought we had a good relationship, I’ve made him money—serious money—since he became a client. And even worse, I’d created a financial plan for him a number of years ago.”

Ouch! But after a brief discussion this advisor admitted that planning wasn’t really his focus. The financial plan was never an active roadmap for the family’s financial affairs. Yes, technically the client had a financial plan, but the client’s perception was that the advisor only knew about investing. A $4.5 million client was lost.  

Before blowing this off as an anomaly, consider a statistic from our research: 74 percent of today’s affluent started their search because they didn’t think their current advisor was capable of handling their family’s wealth. This is the No. 1 reason affluent clients initiate a search for a new advisor. On the flip side, only 9 percent began looking for a new advisor because they were unhappy with their current advisor.

In our research a few years ago, we asked the affluent if they had a comprehensive financial plan they were following. In a parallel research project with financial advisors, we asked if comprehensive financial planning was a core aspect of their practice. Three-quarters of advisors claimed to provide financial planning services, while approximately one-third of our affluent respondents said they had an actual financial plan they were following.

These are serious perception gaps that need to be addressed head on. Consider it preventative maintenance.

Make the theme of your next in-office meeting a service capabilities overview—complete with specific benchmarks that signal when a service you offer needs to be applied. Your objective is to make certain that every affluent client is aware that you are fully capable of overseeing the multi-dimensional aspects of their family’s financial affairs.  

2. Depth of Relationship

For the past decade, our research has identified a serious perception gap regarding the affluent client-financial advisor relationship. 

Our most recent findings on this issue (we’ve been studying it for two decades) continues to highlight the problem: 28 percent of affluent clients perceive to have a personal relationship beyond the professional level, compared to 68 percent of advisors reporting a personal relationship with their affluent clients. Although these figures change slightly year-to-year, the gap regarding the perception of the relationship remains a challenge. 

What makes this even worse, the affluent tell us they want to know their advisor on a personal level. It’s a fundamental concern of trust. When clients have a personal relationship with their advisor, they’re more likely to follow their advisor’s advice, appreciate the services provided, stimulate positive word-of-mouth-influence, be loyal, and introduce the advisor to business opportunities (prospects). This is no pipe dream—it’s reality for financial advisors who have invested the time and energy to expand the prototypical advisor-client relationship beyond the professional boundaries.

With today’s volatile 24/7 fake news media hype world, this becomes even more important. You want to be their trusted source of information who can easily counteract any type of media drama. So, what’s an advisor to do?

The following are connection builders—think of your interactions with two or three of your top clients as you peruse them.

  • Slow down: It’s hard to get personal if you’re always in a rush.
  • Engage feeling: Steer conversations with questions about feelings, i.e., “How did that make you feel?”
  • Always get personal: Include a personal element in all communications, e.g., granddaughter’s heading back to college, upcoming trip to Europe.
  • Social Lunches: Begin with one social lunch per week with an affluent client; no business on your end, but okay for client to initiate.
  • Engage on Facebook: Facebook is the home of major life events and is an invaluable resource for staying in touch on a personal level.
  • Engage their kids: Show a genuine interest in your client’s children, whether they’re 5 or 55.
  • Engage their pets: For many affluent empty nesters, pets are the new kids, so learning about them is a great way to deepen a connection.
  • Share about your family: Let them know what’s going on with your family.
  • Share your home: Inviting clients into your home for dinner will immediately deepen the relationship.

Relax. You don’t need to execute all these connection builders. Simply use them as a guide for deepening relationships with your affluent clients.

Closing these perception gaps will require time and energy. However, this will keep your affluent clients from looking for a new advisor and accelerate the growth of your business. You will transform your affluent clients into advocates.

Matt Oechsli is author of Building a Successful 21st Century Financial Practice: Attracting, Servicing & Retaining Affluent

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