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Wealth Managers Refine Niche Marketing Techniques

A new study on the growing economic power and financial needs of the Indian-American market, “No Longer Newcomers,” underscores the growing reliance on segmentation as a cornerstone of new business development by wealth managers.

A new study on the growing economic power and financial needs of the Indian-American market, “No Longer Newcomers,” underscores the growing reliance of segmentation as a cornerstone of new business development by wealth managers.

“Firms are becoming more aggressive about going after target markets using segmentation in the wake of the financial crisis,” according to Alois Pirker, research director and senior analyst for Boston-based Aite Group. “Many are still just reaching for the low-hanging fruit, but an increasing number are realizing the value of drilling deeper down and becoming more specialized.”

For example, BluePointe Capital Management, a five-year old San Mateo, Calif. firm with over $250 million in assets under management, which issued “No Longer Newcomers: How High Net-Worth Indian-Americans Are Solving the Financial Complexities of Inter-Cultural and Inter-Generational Challenges,” has successfully targeted Indian-American high-tech entrepreneurs and executives in Silicon Valley.

In addition to being e one of the fastest growing ethnic groups in the country, having risen from a population of 1.6 million in 2000 to 2.6 million in 2009, nearly 70 per cent of Indian Americans hold a bachelor’s or more advanced degree, versus just 28 per cent nationally, the report noted. What’s more, Indian-Americans are particularly well-represented among scientists, doctors, engineers and entrepreneurs, and own over one third of all hotels in the United States.

While clearly an attractive target market for wealth managers, Indian-Americans also have a variety of special concerns, including cross-border business, estate and tax issues, identifying reliable business service providers in the U.S. and abroad and dealing with aging parents and family in India, according to Sanjeev Sardana, Blue Pointe’s chief executive.

“Managing the money is not enough,” Sardana said. “Indians tend to be value-conscious and want to know what you can do for them that someone else can’t. To provide that value-add, you must understand their needs and the cultural context.”

Providing Specific Services For Targeted Groups

Indeed, being able to provide specific services to meet a targeted group’s needs is critical when using segmentation as a marketing strategy, say wealth management executives.

“Segmentation is easy to talk about and difficult to do,” said Tim Kochis, chairman and director of new business lines for Aspiriant, the California-based wealth management firm that is expanding its reach nationally. “You have to have something special to offer the group you’re targeting. You can’t just want their business.”

Aspiriant has long targeted corporate executives and small business entrepreneurs, and has developed subject matter expertise for both groups and also interacts with each group commensurate with their unique style, Kochis said.

For example, corporate executives who are used to making decisions quickly want to be presented with a range of options they can choose from on the spot, according to Kochis, while working with entrepreneurs requires being able to “respond to their sense of control” and adjust presentations accordingly.

Segmentation is also playing a “huge” role as U.S. Trust Bank of America Private Wealth Management pursues new business opportunities among women, the lesbian and gay communities, inheritors of wealth, business owners, the elderly and individuals serving as their own trustees, said Chris Heilmann, the firm’s chief fiduciary executive.

“When we engage in market segments we are looking at discreet planning needs,” Heilmann said. “Yes, we are interested in handling assets, but that is a by-product of planning. The one word we do not use is ‘product.’ Everything we’re doing is solutions-based.”

Pushing product is particularly anathema to Indian-Americans, said Rupa Jack, a financial senior vice president for Morgan Stanley Smith Barney in Portland, Oregon. “You can’t come in and sell them product. It has to be more consultative,” said Jack, who is herself Indian-American. “You have to show you understand them.”

While cultural sensitivity is critical, wealth managers don’t have to be Indian-American to win over Indian-American clients, according to Jack. “Indians really value people who are smart,” she said. “This is a culture that honors Brahmins, who are an intellectual caste and created the Vedas, which alluded to intellect and higher thinking as one of the core values for all Indians to pursue. They want to work with somebody who is very capable, competent and has integrity.”

In fact, some Indian-Americans preferred to work with non-Indians in order to keep their business affairs separate from what can be a tight-knit community, said Sardana. “Some people feel they will have more confidentiality working with a non-Indian,” he said.

Outreach Strategies

How are wealth managers pursuing the target markets they have segmented?

BluePointe has been hosting networking events in Silicon Valley for tech entrepreneurs featuring talks by industry experts, Sardana said. In addition, he said, the firm has made a point to establish a network of resources who are familiar with both Indian and U.S. law and business to help clients navigate cross-border issues.

Sand Hill Global Advisors in Palo Alto, Calif. has successfully targeted women going through a major life transition, including retirement, sale of a business, a divorce or death of a spouse, said chief executive Jane Williams.

Referral sources such as family practice (i.e. divorce) attorneys and trust and estate lawyers have been critical to building up the business, and Sand Hill regularly hosts round tables to bring the two groups together to discuss current trends. “Going deeper rather than broader has been very good for our business,” Williams said.

Centers of influence such as attorneys, accountants and business leaders have also played a key role in U.S. Trust’s segmentation strategy, said Heilmann.

“Full-page newspaper ads are not the motivating factor for the type of client we are targeting,” he said. “They are going to be motivated by hearing about us from sophisticated and trusted people who know what we’re doing.”

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