Specialization key to HNW clientele

(September 26, 2005) Advisors seeking to attract and hold onto millionaire clients should focus their practice and specialize in their core area of expertise, according to the 2005 Taddingstone Canadian Millionaire Report.

“The days of the ambitious generalist with minimum qualifications are all but over,” says Keith Sjogren, leader of the wealth management practice at Taddingstone Consulting. “Those advisors who are viewed as specialists in their field, or who work seamlessly with a team of specialists are most likely to be successful with the millionaire community.”

The report suggests the supply of advisors on the market is growing faster than demand among the wealthy, making it imperative for financial institutions to cherry-pick the best advisors.

“Financial institutions that focus on the wealthy need to demonstrate the unique value they create for clients. This extends beyond the individual advisor,” says Sjogren.

The report says millionaire investors have become more conservative in nature; preferring advisors who can focus on managing risk, rather than those who relentlessly pursue growth. The report also shows hedge funds and higher interest savings accounts are still popular investment choices.

Wealthy clients are not only concerned with preserving capital for the present, but also worry about preserving their estate. The Taddingstone report meanwhile, says trust funds are growing in popularity, and millionaires are not entirely confident that their primary advisor can handle their estate planning needs.

Technical knowledge aside, the research suggests that relationship management continues to be a keystone that holds successful advisor-millionaire relationships together.

“The 2005 Report did show that, overall, that millionaires are more satisfied with their financial advisors than they have been in the last five years” Sjogren says. “While a sound economy and positive capital markets account for some of this, advisors are clearly recognizing that relationship management and asset management go hand-in-hand.”

Fees remain a concern among wealthy clients. The report found many high net worth clients question the value they receive in return. At the same time, Taddingstone found that fewer than half kept track of the fees they were paying.

Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com