Tips to serve high-net-worth clients

Ready to add to your book of private clients?

At its national conference in Toronto, the Portfolio Management Association of Canada (PMAC) held a session on serving private clients. (The target client was defined as having more than $1 million in investable assets, not including equity in real estate or private business.)

“The majority of accounts are concentrated below $5 million,” said Keith Sjögren, senior consultant and managing director at Strategic Insight. “Very few accounts are between $5 and $10 million.”

However, those larger accounts control most of the assets.

They represent only 6% of private client accounts, but 45% of industry assets, said Sjögren. Such concentration is a risk for firms, he said.

The wealth of private clients is expected to double by 2026. Said Sjögren: “Wealth is going to be controlled by households that are focused on security, not prosperity.”

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Inter-generational wealth transfers will also be important to these clients, with most transfers occurring in families with up to $500,000 in wealth.

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The most significant wealth transfers, however, will be “concentrated in about 300,000 households where the accumulated wealth is over $500,000,” he said.

Panellists shared the following points:

• By 2026, high-net-worth clients age 65 and older will represent 51% of total high-net-worth households.
• The client turnover rate in the private space is low, and many firms’ new business comes from existing clients.
• Private clients don’t rate performance as their top priority; instead, they want investment counsellors to provide financial planning and advice, a strong referral network, and access to key markets and alternative investments.
• Women are becoming a bigger proportion of high-net-worth clients, and they’re more likely to be interested in socially responsible investing.

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• Private investment counsellors own a greater share of the discretionary market compared to full-service brokerages, but the latter are gaining ground.