Advisors May Need To Make Changes To Win HNW Business
High-net worth (“HNW”) investors, which are defined as households with investable assets between $5 million and $25 million, accounted for one-quarter of the nearly $64 trillion U.S. investable asset share in 2015. Obviously, HNW investors are highly prized by most financial advisory firms, but aspiring advisors often underestimate the breadth of business changes that are required in order to properly serve these customers, according to a recent white paper published by BNY Mellon’s Pershing: What Wealth Wants: Refining Your Firm’s Approach to the High-Net-Worth Market . Some of the required business changes may include: Addition of new services Expanded set of financial planning products and solutions Higher service standards Ability to scale More staff Increased spending on operations and technology Pricing adjustments “Serving this segment successfully is not just a matter of identifying prospects and converting them,” said Katie Swain, director of financial solutions at Pershing, in a statement. “It requires a substantial evolution and transformation of a firm’s approach to service and infrastructure to ensure that HNW clients can be profitably and sufficiently served over the long term.” Wirehouses and private banks were the types of firms that traditionally served the HNW market. More recently, however, independent advisory firms have been expanding their capabilities in pursuit of HNW business — and they’ve been successful, thanks in part to their ability to generate greater customer satisfaction by providing more individualized service. “HNW clients’ expectations for customized solutions are driven by the complex and unique circumstances they experience in their lives,” said Gabriel Garcia, director of relationship management at Pershing Advisor Solutions. “They seek solutions for leveraging existing intangible assets in a way that minimizes interest costs and tax consequences, and advisors need to deliver these services in a seamless way.” For the independent advisors that succeed in winning HNW investor business, the rewards are lucrative. The average client size for an advisor serving HNW investors is more than 30 times that of an advisor serving clients with less than $1 million in assets under management. For more information, download a pdf copy of the white paper .