Marketing Financial Services to the Affluent – How Knowledgeable Are Your Prospects?

One by-product of the recent financial turmoil is that more and more of the affluent are seeking out new financial advice. Whether it be outright firing of their current advisor (still relatively rare) to actively seeking second opinions, there has not been a better time for advisors to actively pursue the affluent market.

However, marketing to the affluent requires a far more subtle approach than many advisors are used to. It’s important to keep in mind the built-in bias that most of the affluent have towards advisors. According to one recent survey from Investment News, 65% of the affluent have an initially negative reaction to someone who says they are a financial advisor. A measly 5% of the affluent believe that a financial advisor is telling the truth when they say that they offer, “unbiased advice”.

It is apparent that the affluent have shifted their mindset when it comes to what they are looking for in an advisor. Unlike just a few years ago, what today’s affluent desires is an individual (or increasingly, a team) who can provide a holistic approach to their financial needs. Someone who can serve as the quarterback of their financial game plan.

What this means for the advisor who wants to build more affluent relationships is that he or she must elevate their game so that they are providing advice that assumes a greater level of knowledge on the part of their prospective clients.

Traditionally, investors were thought of as being in one of two groups; passive or knowledgeable. The passive group was significantly larger, and represented those with little education or interest in investing. The stereotypical “idle rich” comes to mind.

However, there is nothing like a economic meltdown to turn passive investors into active knowledgeable clients. As one such transformed affluent investor commented, “Given the returns I’ve gotten recently, I can’t do any worse than that guy I’ve been paying all that money to!” Although advisors can correctly argue that their training gives them a unique perspective on the market, it’s also true that with a modicum of effort, any investor can learn a surprisingly large amount about the financial options available to them. Moreover, by simply reading the Wall Street Journal and listening to CNBC, any investor can quickly get pretty deep on the economic factors that affect their investments.

So what doe this mean to the advisor? First, it means that they need to elevate the level of conversation they are having with their prospective clients. Rather than assuming their prospects are passive, they need to enter into the discussion with the assumption that the person they are speaking with is knowledgeable and reasonably well-informed. As one very successful advisor to the affluent said to me, “It is much easier to start the conversation at a high level and then bring it down if you find you’re talking over their heads, then vice versa.”

By Suzana