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by Matt Oechsli
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San Diego: "Is your research showing that the
affluent are looking for something different in a financial advisor due
to the financial crisis?" asked James as he was picking up his
registration packet for our Rainmaker Weekend.
It's a great question and I told James that he was about to
become immersed in understanding today's affluent and what elite
advisors are doing to both attract them and earn their loyalty. But for
the purposes of this issue of Practice Management, I will begin my
answer with a summary statement:
The affluent are looking for someone who can be a solutions provider,
overseeing the many dimensions of their family's financial affairs.
For more than 10 years, The Oechsli Institute has studied the
world of the affluent (the top quintile of U.S. income earners),
conducting research in an effort to better understand them. Most
recently, we commissioned an independent study ("Understanding the
Affluent: America's Top Quintile Income Earners") to identify who the
affluent trust and what their key motivators are. Thanks to this ongoing
research, we've learned a great deal about what makes the affluent tick.
What the Affluent Want
According to The Oechsli Institute's study, "Understanding the Affluent:
America's Top Quintile Income Earners," affluent investors want and need
a financial advisor with depth of knowledge, who is capable of providing
financial advice and guidance for their family during these challenging
times. They are desperately searching for a trusted financial advisor or
team of advisors to coordinate every aspect of their family's
financial affairs. They need someone who is unbiased, professional and
always considers their best interests when making decisions. But most do
NOT know where to find these individuals or teams of
individuals.
However, many affluent investors who have a relationship with a
financial professional are displaying significant dissatisfaction with
these relationships. Which brings us to an important question: do your
affluent clients perceive you as a stockbroker or as their financial
advisor? Let's hope it's the latter because, as our research reveals,
there is a major opportunity for financial teams to demonstrate
that they understand the reasons for the dissatisfaction and will
correct the problems!
If you want to significantly increase your odds of becoming the "go-to"
financial advisor or team for affluent investors, here are a handful of
statistically significant criteria to consider. They were culled from
our latest affluent research projects:
Focused on overseeing my family's financial health, not marketing your
practice.
- Clearly reveal your fee structure.
- Proactively contact clients when anything might impact their
portfolio.
- Making certain that investment performance meets
expectations.
- Avoid using technical jargon.
- Coordinate all of the client's investment decisions.
- Create and execute a formal financial plan.
- Help to coordinate and organize all of the client's financial
documents.
Now, let's combine the above data with data gathered from another
Oechsli Institute study, called "How the Affluent Make Purchasing
Decisions" (yes we commission a lot of studies). This revealed 7
qualities associated with how the affluent make major purchase
decisions, which were (again) ranked in terms of importance. Although
these stats apply to any major purchase decision--from flat-screen TV's
and luxury cars to general contractors and financial planners--they are
particularly applicable to financial advisors:
1) Two criteria stood above the rest: 83 percent said that
offering the right set of features was very important; 76 percent said
that being able to find the best possible option through careful
evaluation and comparison was very important.
2) 66 percent said that the opinions of immediate family members
and trusted friends had a very significant impact on deciding where to
look for options when making a major purchase decision, but only 38
percent said those opinions had a very significant impact on the final
purchase decision.
3) Once the search process is underway, the affluent place more
confidence in their own ability to find information, sort through
options, and make the final decision. Respondents also indicated that
the Internet and trusted periodicals serve as major research vehicles.
4) When given an opportunity to write in other criteria
important to making major purchase decisions, warranties and guarantees
won by a wide margin.
5) Even though respondents were extremely price/value conscious,
finding a discounted or sale price was not as critical to their final
decision.
6) Problem resolution and post-purchase service rated as having
the greatest impact on repeat business. Offering the lowest price ranked
last.
7) Respondents gave far less importance to reviews and
testimonials than they did to the responsiveness of sales and service
people.
Please make a major mental note of the second quality: the
affluent rely on family members and trusted friends when making major
purchase decisions. What this means is that financial teams must be "the
real deal" before they can hope to win referrals from coveted
clients--the affluent individuals and families who put the "wealth" into
"wealth management."
As our rainmakers are quick to learn, the two top qualities
impacting an affluent prospect's decision in selecting a financial
advisor are; 1) reputation of the individual (word-of-mouth influence)
and 2) first impression of professionalism and competence.
The affluent want the real deal. Couple this level of
professionalism with rainmaking skills and you'll have very little
competition.
If you want to learn even more about the attributes of elite
financial teams, download our latest 2009
Teams Research Report or read the introduction to Matt Oechsli's
latest book to be released August 27th Elite
Financial Teams: The 17% Solution.
Once again, we want to thank all of you who have emailed comments and
questions to us. We will continue to do our best to answer each one.
If you have any topic suggestions or special requests, please contact
Rich Santos, publisher of Registered Rep. and Trust &
Estates magazines, at rich.santos@penton.com.
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