October 2014: High Net Worth Client Resources

The October 2014 Mutual Fund Monitor – Advisor Report examines the scope and focus of our coverage firms’ resources related to seeking out and serving high net worth (HNW) clients. In total, 12 of our 19 MFM-A coverage firms address high net worth topics to some extent. Within this sample, there is a broad range of resource types available, and the detail and utility of these resources vary greatly. We awarded three A-grades to firms with clear, relatable resources and/or helpful thought leadership on the topic, six Bs to firms that deliver adequate but not best-in-class features and three Cs to firms with less helpful resources that may only pay minimal attention to high net worth issues.

In general, we found that dedicated, direct discussion of high net worth issues is relatively rare. No firms offer a dedicated site area to support this kind of content, and (for the most part) high net worth issues are mentioned as just one part of a firm’s approach to a larger issue, such as client segmentation or referral cultivation. Firms offer a diverse mix of materials to support these topics, such as worksheets, prospecting letter templates, commentaries and focused consulting programs.

Eight firms offer materials related to advisors’ client segmentation strategies, which can ultimately help them focus their prospecting efforts on high net worth investors. These resources employ a generally similar set of concepts and strategies, taking the form of a three-step process. First, advisors should evaluate each of their clients in terms of total assets and qualitative criteria, such as the potential for future referrals. Secondly, they should try to identify their ideal client and pursue a specific niche, which can be based on patterns already present in an advisor’s book of business or on social or personal ties. Lastly, advisors should establish a stratified service model that provides personal attention to only the most worthwhile clients that fit the advisor’s ideal vision.

Aside from functional advice on how to seek out high net worth clients, another major theme in our coverage group is the way firms try to contextualize and communicate the various concerns and attitudes of affluent investors in general. These resources may not be directly related to the prospecting or referral process, but on a macro level they do help advisors understand the demographic they are pursuing; on an individual level, they help advisors navigate difficult discussions that they might need to have with certain clients. Two firms, for example, provide commentaries that explore affluent investors’ current outlooks and expectations, and another firm helps advisors understand their clients’ emotions related to the “encumbered wealth” conversation.

We discovered the following key findings in our analysis:

  • Sixty-six percent discuss client segmentation and niche marketing.
  • Seventy-five percent explore referral cultivation.
  • Fifty percent focus on relationship management.
  • Sixty-six percent employ commentaries on the topic, 42% use testimonials and 33% provide worksheets.
  • Only 33% discuss fee pricing for HNW clients.