news & trends
HIGH-NET-WORTH CLIENTS
Wealthy Clients Say Advisors Are MIA
| By Walter H. Zultowski, Ph.D.
A new Phoenix Wealth Survey offers tips for meeting their needs.
Message to advisors: Get in touch immediately with your high-net-worth
(HNW) clients.
A sizable number of them are dissatisfied with the lack of contact from
their advisors, as well as the products
and services being offered. In fact, 13
percent have already decided to replace
their advisor, and an additional 15
percent are unsure if they will continue
the relationship.
Those are some of the key findings
from the 2009 Phoenix Wealth Survey,
which explored the changing financial
attitudes and behavior of HNW clients
in a negative wealth environment. The
survey, which was conducted by Harris
Interactive, polled 1,735 households
with $1 million or more in net worth
(excluding their primary residence).
While the survey reveals some trouble spots in the HNW-advisor relationship, it also provides insights about how
advisors can better serve their clients in
difficult times.
The economic turmoil has stripped
America’s millionaires of their confidence
and sense of security. In fact, just 28
percent of them said their wealth was
“extremely” or “very secure” for the long
term. Concerns about retirement have
skyrocketed. Half of the respondents said
they were confused about the best way to
invest their money, the highest percentage
in the survey’s 10-year history.
Your guidance needed
Against this troubled backdrop, HNW
clients are looking for guidance and
are turning back to advisors, at least
compared with what happened in 2008.
Although 73 percent said they are getting
advice from a professional, compared
with 67 percent last year, the numbers
are still surprisingly low, given the
difficult times.
One interpretation is that these
wealthy clients turn away from
advisors when their investment performance starts
to deteriorate but return
when things get really
serious instead of going it alone.
Advisors are still
being evaluated with
a critical eye, however. Sixteen percent of
those with a primary advisor
reported some level of dissatisfaction,
up from 11 percent in 2008. While investment performance and fees contin-
HNW clients are
looking for guidance
and are turning
back to advisors.
ue to be an issue, HNW clients who are
looking for a new primary advisor also
cited “advisors not being proactive in
maintaining contact.” During the current market downturn, nearly a quarter
of respondents said they had to contact
their advisor, compared to 27 percent
who said their advisor contacted them.
Also, 31 percent of those looking
for a new primary financial advisor
said advisors were “not offering the
products and services needed.”
Strategies for advisors
This suggests two strategies for creating and sustaining successful client
relationships in a negative wealth
environment: Maintaining contact
and providing innovative solutions. Advisors need a renewed
commitment to client service
and a more holistic view of
planning. For example,
39 percent of HNW
clients don’t have a
written financial plan,
and 38 percent don’t
have an estate plan,
indicating a need for a
broad-based approach.
Overall, advisors must
avoid underestimating or
minimizing their clients’
concerns. They must respond to their
needs, particularly the fear of outliv-
ing their assets and should also add
longevity planning to their roster of
services. Younger millionaires are
particularly concerned about outliv-
ing their assets. In addition, advisors
should be prepared to discuss tax
issues, cash flow, and budgeting and
debt issues.
Also, in light of the increasing penchant for safety among even wealthy
clients, advisors can offer more product solutions that merge investment
and insurance features. This addresses
one of the key lessons from the severe
financial downturn: Asset allocation is
not enough to protect one’s wealth.
Advisors must recognize that they have
an unprecedented opportunity to solidify
existing relationships and forge new ones.
The need for caring, professional advice is
there; it’s up to them to fill that need in a
proactive and creative way. ;
Walter H. Zultowski, Ph.D., is senior vice
president of Research and Concept Development at Phoenix Cos. Contact him at
WALTER.ZULTOWSKI@phoenixwm.com
or 860-403-6691.
