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“I’ve always been told that affluent clients fired their financial advisor because of poor service,” opined Cory. With an air of authority, he then asked, “So now you’re telling us that it’s all about when they’ve accumulated a sizable amount of assets?!”
Cory had misunderstood what our data was telling him. The key words were prompted and search. In other words, these affluent prospects knew they needed a professional who was capable of handling the complexity of their family’s financial affairs.
Dissatisfaction with Current Advisor vs Searching for New Advisor
As I explained to Cory, this might seem like splitting hairs, but there is a big difference between affluent dissatisfaction with their financial advisor and proactively searching to replace their advisor. How so? Because, in our world of intangible services, the client is never really aware of what they’re supposed to be receiving until they’re later made aware that they’re not getting what was promised.
Affluent investors have reported dissatisfaction with advisor communication and service, which has been highlighted in our research. However, this dissatisfaction rarely results in an affluent investor searching for a new advisor. It’s out of sight, out of mind, unless a major faux pas occurs or this dissatisfaction is stirred-up by another advisor who is skilled in the art of affluent sales.
Circumstances that Lead to Searching for New Advisor
When investors accumulate a higher level of assets that requires more sophisticated financial solutions, or experience a financial life event (receiving an inheritance, selling a business, etc.) their needs become “top-of-mind.” These circumstances tend to stimulate Word-of-Mouth Influence (WOMI) — they start asking around. The data outlined below speaks directly as to what prompted an affluent investors search to replace their advisor:
The message for financial advisors is clear; possessing the knowledge and professionalism to oversee the complexity of the multi-dimensional aspects of an affluent client’s financial affairs is a basic requirement for working with today’s affluent. The days of one-dimensional investment advice are over.
The last thing you want to happen is for your clients to reach a level of affluence and as a result, begin looking to replace their advisor. WOMI works both ways, and word will get around that you’re not equipped to handle larger clients with more complex financial needs. Ouch!
This requires that you have a clearly defined process for delivering comprehensive wealth management services. You need to be able to masterfully showcase your services to referral alliance partners as well as prospects, and of course, consistently deliver these services to your affluent clients. It’s also important to be able to articulate your services in small sound bites when in conversation. Armed with the knowledge that accumulating larger sums of assets will prompt a search (if the current advisor is perceived as unqualified), you want to make certain that WOMI is working for you at all times, so that you’re top of mind.
Scope of Search to Replace their Advisor
This leads to our next grouping of data. We were curious as to how extensively the affluent searched for a new advisor. As you can see in the data points below, their search was not very extensive.
Assuming that the “unsure” responses met with more than a couple of financial advisors during their search, 19% of today’s affluent were actually shopping around.
What does all of this tell us? That the largest segment (41%) is hiring the financial advisor who was recommended and made a great impression during the meeting.
When CPAs and attorneys are making recommendations, it’s not unusual for two or three financial advisors to be suggested. This is a contributing factor as to why 20% meet with at least one other advisor, and 20% meet with two. The bottom line is that your job is to win that prospect by making a great impression during the meeting.
The competition is fierce for affluent prospects. Yet, these findings suggest that their search to replace their advisor was prompted by the perception that their current advisor was not equipped to handle the complex affairs of the affluent.
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