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Survey: What high net worth investors want
Michael Schweitzer
Sean Walters
February 22, 2018
KEY TAKEAWAYS
- Insight: High net worth clients are largely satisfied with their advisors, but most also expect advisors to voluntarily seek additional training. Clients’ expectations regarding credentials are only likely to increase.
- Implication: Voluntary certifications to demonstrate ethics and advanced skills can help advisors stand out with potential high net worth clients.
- Implementation: Make it a practice to gain and explain your credentials that show ethics and knowledge beyond what’s required.
Listen to the full conversation between Michael Schweitzer and Sean Walters about this survey.
Advisors: Here’s some good news coming from your high net worth clients. These valued clients are almost unanimously satisfied with their advisors. The news gets better: 92% of high net worth clients reported they were at least somewhat likely to remain a client. But advisors looking to cater to this segment of the market shouldn’t take these high marks as a sign their work is done, according to a new analysis by Investments & Wealth Institute (formerly IMCA) conducted by AbsoluteEngagement.com. The analysis summarizes findings from the polls of 585 high net worth advisors in the U.S. and 444 in Canada in an online survey between August 7, 2017, and August 15, 2017.
The results, shared with Capital Group at the Schwab IMPACT conference in November, show what certifications clients would place a high importance on, especially if looking for a new advisor.
The findings of the research are telling. While high net worth clients are relatively pleased with their advisors, they still expect high ethics and continuing and voluntary training. “The data clearly shows that clients believe their advisor should go above and beyond what is required to sharpen their technical skills,” the study states.
Some of the key conclusions of the analysis show:
1. Clients want advisors to voluntarily seek advanced training.
Just the bare minimum of experience and training isn’t of interest to high net worth clients who see themselves deserving advisors who strive further. Specifically, 62% of high net worth clients said the fact their advisor is seeking designations on their own volition is at least somewhat important.
2. Credentials are not all held equal.
When asked about what mattered most to them when it comes to credentials, high net worth clients see value in credentials that could be revoked if the advisor violates ethical standards. Similarly, credentials that require rigorous standards and require ongoing education were prized by most clients. Specifically, 62% of high net worth clients said it was at least somewhat important their advisor holds voluntary designations in addition to what’s required.
3. Clients will consider advanced certifications to be more important when evaluating advisors in the future.
Designations are already important to a subset of the client market. About a third of clients originally looked for advisors that hold certain designations when they evaluated candidates. Among this group, three-quarters of clients said they wouldn’t have worked with advisors lacking the certifications they seek.
The research suggests, however, that certifications will grow in importance to many clients. More than three-quarters of clients said designations and certifications would be at least somewhat important to them if looking for a new advisor right now.
4. Investment management still matters.
Despite industry consternation over whether clients will demand more services from advisors in addition to investment management, this core aspect of the relationship is still vital. When asked what they’re paying their advisor to do, investment management was cited most frequently, by 59% of clients polled.
SERVICE
% OF CLIENTS WHO SELECTED
Investment management
59%
Financial planning
46%
Wealth management
36%
Retirement solutions
35%
What are you paying your advisor to do?
High net worth clients most frequently see investment management as a primary service to be provided by their advisor.
Source: Investments & Wealth Institute, “Client Research,” 2017
Video
Survey: What High-Net Worth Investors Look for a Conversation with Investments & Wealth Institute’s
Michael Schweitzer:
What was, uh, what was kind of the ah-ha? What, what surprised you in the takeaway from, from the survey?
Sean Walters:
Well, it was probably twofold. One the, there's a, there's the good news. Let's talk about the good news and the bad news.
Michael Schweitzer:
Sure.
Sean Walters:
The good news is that high network clients that work with an advisor are extremely satisfied 94%, 95% satisfaction ratings. A lot of loyalty with the advisor they work with. Some, some work with several different advisors and so we kind of cross tab that. But the, there's, there's a high level of satisfaction across the board. So that's the good news.
The bad news is, where do you differentiate yourself? If every advisor is getting those kinds of levels of satisfaction, how do you really kind of push your client engagement to that next level. How do you compete with other advisors for high network client business, which is extremely competitive marketplace? And so, some of the, the findings we really dug into had to do with that, that differentiation. And I'd say the ah-ha moment was a- advanced expertise and ethics were really the key factor for success in differentiating the, you know from one advisor to another in the eyes of those clients.
Michael Schweitzer:
So, in the industry there are licensing requirements, that you have to do.
Sean Walters:
Yeah.
Michael Schweitzer:
To just hang a shingle. And then there are voluntary designations that you can pursue. Clearly CPWA, Seema, and others are voluntary. Do clients create any, is there any differentiation in the eyes of a client between voluntary designations like that and the standard-
Sean Walters:
Yeah.
Michael Schweitzer:
...uh, requirements?
Sean Walters:
I think that was another major finding was that 66% of clients when they're seeking an advisor look for designation. That was really interesting that two thirds are actually looking for designations now. And I've been in this business 20+ years, you've been around for a while-
Michael Schweitzer:
Sure.
Sean Walters:
...yourself Michael. You know, I think that's good news. I think-
Michael Schweitzer:
Sure.
Sean Walters:
...clients are looking for that, that next level. The other thing, you know, related to your questions that they, they don't understand often what's the different between a, a licensed and what's minimally required and what's a voluntary standard, but they certainly want the next step. They don't want an advisor who's just doing what's minimally required to be licensed, so that expectation among high network clients is definitely there.
The bottom line: Implementation
If you’re taking the time to add certifications, your efforts are increasingly valuable to clients.
Putting the findings of this study to work, though, calls for more than just sitting for exams and studying.
Most high net worth clients, 54%, would like to have a better understanding of the designations and certifications their advisors do have.
Make sure your clients know how much extra work you’re putting in to keep your skills sharp.
This can be done either when meeting with clients or using your LinkedIn profile as a place to showcase your credentials.
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