Unlocking Real Value Blog

The Wealthy Rebel – Advisors Beware

A new Cerulli Associates Inc. survey of 400 affluent households with at least $10 million in investable assets has some very sobering news for advisors:

  • 57% of these households are working with at least five or more advisors
  • 64% are working with at least four advisors (compared to 16% in 2008)
  • 18% are working with only one advisor
  • 44% changed their primary advisor over the past 12 months

I am frankly surprised by these results. Two or three advisors makes sense – but four or five? We have all heard reports that the financial crisis resulted in large client moves from advisor to advisor – but the fact that almost half changed their primary advisors should make advisors sit-up and take notice.

The report also talked about the needs of these clients. On average, these households have more than 13 in-person meetings and 18 client-initiated phone conversations per year. Add advisor-initiated telephone contact and the number of annual contacts approaches fifty. We all know how important services is – but this many contacts per client is a little surprising – and obviously requires a lot of time and resources.

If I were an advisor reading this, I would ask myself the following questions if I either am or are thinking about targeting this niche:

1) Do I really want to serve this niche, or am I better off going after clients with fewer assets? Focusing on clients with lets say $1,000,000 to $5,000,000 in investable assets is still a huge marketplace and client expectations might not be as high.

2) If you do want to serve this niche, you need to ask yourself questions such as a) How do I become the “Alpha” advisor – the primary advisor?; b) How do I altar my marketing approach to demonstrate that I have the ability and experience to help evaluate the client’s entire portfolio, not just the portion they have entrusted to me? In other words, if I take as a given that clients will test me and use other advisors from time to time, how do I establish my role as the person that helps them in their overall evaluation and monitoring process? Often times, helping rather than fighting this trend will distinguish you from the competition; and c) Is my service organization and team capable of servicing clients that are demanding so much attention? Do I need to re-jigger my service strategy to accommodate these trends?

3) Is my message and value added proposition clear? Money has been in motion and the odds are that some of these clients will not be happy with their new advisors. How do I highlight my differentiating characteristics to take advantage of today’s trends?

This study highlights the fact that competition has increased (we all knew it had – but not to this extent). Use this information to make yourself and your business better.

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