When it comes to winning
A new report by Boston-based industry research and consulting firm Cerulli Associates, "U.S. High-Net-Worth and Ultra-High-Net-Worth Markets 2023," found that service offerings are now a bigger driver of
In the not-so-distant past that many advisors can still recall, winning new wealthy clients was a matter of getting to know them first and
"While offering fewer than 10 services on average in 2017, HNW practices currently offer 12 services to their clients, on average," the authors wrote in the Cerulli report, which was published in December. Some 35% of surveyed wealthy investors told Cerulli "services and experience" were the main reason why HNW individuals became clients of their primary provider, followed by 32% who cited "relationships" and only 16% who cited "investment performance/fees."
For the purposes of this study, the term "high net worth" encompasses households with over $5 million or greater in investable assets, according to the study's lead author Chayce Horton. "A subset of that would be UHNW households, which by our definition are those with $20 million or more in investable assets," said Horton, who is senior analyst of high net worth and wealth management at Cerulli.
However, that doesn't mean relationships no longer matter for generating business — and up to now, existing client relationships have been a key factor in winning new wealthy clients, the report said. "Increasing referrals from existing clients is the top-ranked factor for long-term AUM growth across HNW-focused advisory practices," the report authors wrote.
Among service offerings that have become table stakes, financial planning leads the pack. In every high net worth practice the study surveyed, financial planning services had already been offered as either a primary or secondary service, the report said. "Estate planning (70%) and tax planning (45%) have been two of the fastest-growing service areas as advisors prepare their clients for impending wealth transfers and transitions."
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Horton said in an interview that additionally, in the RIA channel, he had also seen "banking services … emerge as table stakes outside of the bank channel." This means that RIAs increasingly offer "banking type services — whether that be lending, trust-based services, bespoke private banking services — through their custodians or other third party providers that help them do that," he said, adding that offerings for investing in alternatives were also a service that could help firms stand out.
Jason Friedman, a former high net worth wirehouse advisor who is the co-founder and CEO of advisor lead generation website AdvisorFinder, added in an interview that in the high net worth space, he's noticed "more advisors team up with each other."
Teaming had already been underway at wirehouses but was becoming more common in the RIA space, he said. When an advisor is part of a team, they can offer more services. "It gives a client, I've seen, a sense of comfort — compared to just a one-on-one relationship with just one advisor and one client."
Joshua Brier, the chief operating officer at RIA GYL Financial Synergies, said his own firm recently built out a family office service for high net worth and ultrahigh net worth clients to position themselves to address their increasingly complex needs — reflecting another
Karen McColl, senior vice president of wealth management at Waltham, Massachusetts-based RIA Commonwealth Financial Network, said in an interview that "advisors are having to address an increasing number of topics" with clients at large, including the firm's high net worth advisors. "So any financial plan might include 12 to 15 different aspects that need to be really analyzed and understood in order to serve that client."
