Connecting with Affluent Clients and Prospects

In 2017, there were 31 million Americans with mass affluent status. The number increased by half a million in a year, according to Spectrum Group’s Market Insights 2018 Report. It has grown by nearly seven million since 2008.

So where do financial advisors find affluent investors? A whopping 90.8% of today’s affluent investors initially found their financial advisor through some form of word-of-mouth, according to The Oechsli Institute.

In other words, referrals are of utmost importance when it comes to working with this highly coveted group. Matter of fact, Oechsli’s research showed the top two ways affluent investors found their financial advisor were “introduced by a friend, family member or a colleague” and “referred by another professional.”

As we learned from the ever-popular book The Millionaire Next Door by Thomas J. Stanley and William D. Danko, millionaires often do not look the part. And although this book was first published back in 1996, the premise and statistics certainly still hold true.

Stanley and Danko told us the majority of millionaires in the United States accumulated their wealth during one generation and are usually ordinary people. That’s right, ordinary people.

So if they are ordinary people, what is the key to their affluence? The key they shared with us has been “under consumption.” Said another way, they typically live in a normal middle-class neighborhood and don’t drive the most expensive cars. Contrary to what may be popular belief, they don’t outwardly display their wealth.

While this concept obviously isn’t a new one, keep this top of mind when you receive that highly sought-after referral or introduction.

R. A. Prince & Associates, Inc. conducted a research study on the affluent and found that the millionaire marketplace can be segmented into nine different high-net-worth personality types.

These personality or profile types are helpful for advisors to keep in mind when connecting with wealthy clients and prospects. The top three personality types are what Prince & Associates refer to as the Family Stewards, the Investment Phobics and the Independents. Each wealthy personality type has a different investing motivation.

And no surprise again, these top three high-net-worth profiles also align quite similarly with Stanley and Danko’s findings.

The largest of the nine affluent profiles is the Family Steward, according to Prince & Associates. As their name implies, the Family Steward’s investing motivation is taking good care of their family. They are typically not very knowledgeable about investing and are very conservative. Family legacy is especially important to them.

When you are connecting with this millionaire profile, be sure to emphasize how your services focus on their priority of taking care of their family. They do not want their family members to have to worry about money.

To deepen your relationships with Family Steward clients, consider hosting more family-oriented events. Ask them regularly about their individual family members and be sure you know them by name. Take careful note of their children’s and grandchildren’s activities, hobbies and interests. These are important aspects of their lives to connect with them about.

The second largest of the nine profiles, according to Prince & Associates is the Investment Phobic. As their name suggests, they strongly dislike and are even fearful of investing.

A strong relationship with their advisor is extremely important to them, and so is the element of trust. They are intensely loyal to their financial advisors and will refer you often.

They are not knowledgeable about investing and they don’t want to be. They become overwhelmed and confused with the details of the investment process. They need you to help them with decisions. While it is necessary to discuss their investments in meetings, keep the discussions light in nature and open and close your meetings with non-financial matters.

The third largest of the nine profiles are the Independents. The Independent’s investing motivation is simply to attain financial independence, just as their name suggests.

This affluent profile wants to accumulate enough wealth to have a secure retirement in order to focus on their retirement dream of personal independence.

It is important to keep your financial discussions focused on their early retirement goal. They don’t want to work any extra years in their professional career. They also don’t want to worry about financial obligations in their retirement years. Instead, they want to focus on their hobbies and aspirations, whether it be golfing, gardening or volunteer work.

With the rise of millionaire investors, to have a shot at turning them into clients, referrals and introductions are paramount.

Once you received that referral, making strong connections is the next step.

In order to differentiate yourself from your competitors, you must initiate making meaningful relationships by understanding what their core investing motivations truly are. Uncovering who they are and not just what they have is crucial.