While the number of high net worth (HNW) individuals in Australia decreased by almost 25 per cent in the 12 months to December 31, 2008, these wealthy Australians continue to be actively courted by an increasing number of advisory businesses. And, while we have found that the definition of “high net worth” varies significantly from firm to firm, there is no doubt competition in this relatively small segment of the market remains intense.
However, as seductive as large investable assets and high incomes are, and regardless of what you call these clients (“high net worth” versus “mass affluent” versus “emerging upper middle income professionals”) or how you may classify them, if you currently target this market or are considering moving into this space, the following may be of real interest to you. A recent analysis of the 40,000 plus Australian clients that have participated in the Business Health CATScan Client Satisfaction Survey clearly indicates that to date, many advisers have struggled to completely satisfy their higher income earners. Those clients with household income in excess of $75,000 per annum are less satisfied with their adviser’s performance across all nine of the key service delivery areas.
While we are not suggesting that an annual household income of $75,000-plus should be the universal breakpoint for HNW, it is also worth noting that in the average Australian practice, less than one in three clients currently fall into this salary band. So what is contributing to these results? Of course it is always dangerous to generalise, and each business is unique, and hence the challenges and solutions will vary between practices; in general, though, five key themes emerged from the analysis of the higher income earners in our CATScan data warehouse.
1. Underst and and carefully manage service expectations
Higher income earners generally have much higher service delivery expectations. They tend to measure and benchmark the service they receive from their advisory practice, not necessarily against other companies in the financial services arena, but rather, against global best practice, regardless of the specific industry. Advisers specialising in this market must take a very active role in setting and managing their clients’ expectations. If this is not done effectively (and continually reinforced after every meaningful client contact), advisers may find themselves faced with completely impractical or unrealistic hurdles to meet. Left to their own devices, high net worth clients can expect the world and want it delivered yesterday!
2. Broaden your solution suite
Clients with higher incomes or net worth can have a broad range of complex needs that require specialist advice across a number of different areas. This often calls for expertise that extends well past the traditional product offerings of many practices. Consider if your practice has the skills and knowledge to add real value to these clients. If it doesn’t, either start investing in increasing the capabilities of your team or, develop a strong and trusted alliance/referral network with other associated professional service providers.
3. Consider your profile
Is your firm widely acknowledged as one of the premier suppliers of financial advice to successful members of your local community? If not, you may be at a distinct disadvantage when it comes to attracting new, higher income clients. As you move up the income scale, your firm’s reputation and positioning, along with your own personal profile, become increasingly important. Also consider the location and the look and feel of your premises – are they in keeping with those of the other professionals your target market may also be using? Does your firm offer a rich, transactional website capable of standing up to a thorough and discerning due diligence process?
4. Surround yourself with a great team
While all clients (regardless of their salary or investable funds) truly do value the relationship they have with their key adviser, higher income earners expect the same level of excellence and professionalism from everyone involved in managing their financial affairs. Do all your staff excel at what they do and do they project the image your best clients expect?
5. Become referrable
In keeping with most “linked” communities, endorsements and testimonials from respected friends, family or colleagues are incredibly important when dealing with higher income earners. Ensure that your most valuable clients understand and appreciate that you value referrals and continually create opportunities to explore how you may be able to help others within their social network.