A personalised approach, clear investment strategy and strong client communication are the top must- and nice-to haves from advisers, according to high-net-worth investors.
Data from the Rich Decisions research by Praemium and CoreData shows that HNW clients value clear and timely updates from advisers significantly more than competitive fees.
“That engagement needs to be more than a generic newsletter that goes out once a month with a market update. Whilst that’s important, it needs to be very tailored because this cohort want personalisation in their service and in how they’re receiving their service,” Denis Orrock, chief commercial officer at Praemium, tells Professional Planner.
“Ultimately, in a relationship between two people, talking and face-to-face communication is going to win the day.”
A combination of personalisation and the human element of advice is what HNW clients value most, so advisers need technology that will support the delivery of this service at scale.
“It’s about being strategic with where you’re using technology to uplift and reduce that backstage work so that you can deliver more, getting front of your clients more, create that connection, because the rich forms of communication that really have the most impact,” CoreData research consultant Anna Vennonen tells Professional Planner.
And trust is a big part of this. The majority of advised investors have an ongoing relationship with their adviser that lasts, on average, six years. The research found 77 per cent of HNW clients have high trust in their financial adviser.
This is where the opportunity for advisers is to build trusted relationships as one point that came up from the research was that personal integrity was important.
“So, we know that that is something that advisers should be focussing their energy on cultivating that relationship. A lot of clients spoke about the rapport that they have with their advisers and another thing that we’re seeing is making sure that the client knows that they’re being looked after, that the adviser is available enough,” Vennonen says.
Orrock says this relates to clients looking for reassurance during market volatility.
“They value the adviser reaching out to explain how that impacts their personal set of circumstances, and I think that’s that trust gain mechanism for the adviser and the opportunity to have a customer who’s satisfied, have a great relationship with the customer, but more importantly, develop a long tenure with the customer as well, from that perspective,” he says.
Increase in HNW clients: an opportunity for advisers
The past 12 months saw a 10 per cent increase in the number of high-net-worth households, representing an extra 120,000 households, from emerging to ultra-high net worth, and bringing HNW investment wealth to $4.6 trillion.
“But we haven’t seen a 9 per cent increase in advisers in the Australian market at the same time,” Orrock says.
“The advice gap, unfortunately, is widening. And for advisers who are looking to service more customers or who are looking to pivot or increase their exposure to high-net-worth investors, because obviously this is an attractive market to provide advice to, time is a challenge for them.”
A high number of HNW clients (seven in 10) work with a financial adviser and 84 per cent who receive ongoing advice are confident with their investments, while only 64 per cent that do not get advice are confident with their choices.
Advisers should be working on efficiency gains to close the advice gap without sacrificing personalisation and proactive communication. The natural answer to this is AI, but Orrock says the adviser will still need to pick up the phone and make sure they are regularly engaged with the customer.
“We’re not going to add 15,000 advisors anytime soon in Australia,” Orrock says.
“This cohort of investors value trust and they want to have a trusted relationship with their adviser, they put trust and communication at their top of wants. Fees and what they’re paying is down the bottom… they’ll pay for service and they’ll pay for quality service, and for advisers I think it’s a huge opportunity.”
The research shows that the greater the wealth of the client, the longer the relationship with the adviser.
“So, there’s that opportunity to grow that as you grow the client’s wealth, and if you’re communicating and you’re performing reasonably well, and you’re listening to them, you’re providing what they’re asking for, they don’t have any real reason to move.
“It is a long-term relationship that advisers should be seeking to create.”
Vennonen says HNW clients are often quite knowledgeable when it comes to financial advice and sometimes they want to be taken through how things are being managed or use their adviser as a sounding board, “to check their own ideas against and give that kind of objective opinion on”.
According to the research, the top areas HNW clients seek advice in are tax and estate planning, (53 per cent), peace of mind and reassurance, (47 per cent), access to expertise they do not possess, 46 per cent, and an objective perspective on their decisions (43 per cent).
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