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August 04, 2016 at 10:45 AM
This month’s kickoff of the NFL preseason means millions of eyes will be focusing on multimillion-dollar star athletes, as well as on newer players who are accumulating their first millions. I’m sure many financial professionals would love to serve the long-term life insurance and health care planning needs of more millionaires, including top-tier sports figures, but these athletes often have easy access to financial advice, and other millionaires may not seem receptive to professional financial help. Others may welcome assistance — if engaged with in appropriate ways.
A recent research report, “Making Retirement Security a Reality,” from the Deloitte Center for Financial Services, shared that nearly one-third of millionaires have never consulted a financial professional. Similarly, a December 2015 LIMRA report, “Mass Affluent Market Use of Financial Advisors,” revealed that more than one-third of affluent investors believe they can manage their own financial affairs. Given these realities, how might financial professionals foster stronger connections with affluent clients and prospects, conducive to helping meet these audiences’ needs?
In order to address that question, it’s crucial to understand what’s meant by “affluent.” For purposes of this article, affluent consumers have $1 million to $5 million in investible assets, excluding their homes.
But millionaires differ in their financial mindsets and the characteristics they seek in planning and protection solutions. As LIMRA’s “MarketFacts Quarterly” recently reported, the organization’s research has unearthed three distinct segments of affluent investors based on their retirement income and product feature preferences:
• Guarantee seekers value “peace of mind” and strongly prefer lifetime guaranteed income, for which they are willing to trade off other features like investment growth or control of assets. They are more likely to be female and their trust in financial professionals is high.
• Estate Builders seek investment growth and self control over their investment management and allocations. Flexibility is important to them, but guarantees are not; their risk-tolerance level is high. They are more likely to be male and their trust in financial professionals is high, but cautious.
• Asset Protectors are primarily interested in preserving their investable assets. They seek guaranteed returns and would rather not dip into principal in their portfolios. They tend to favor CDs and other conservative investments. Their trust in financial professionals is generally high, but skeptical. How, then, might financial professionals forge even deeper bonds of trust with consumers in these market segments? The key, it seems, may be engaging more robustly with affluent clients and prospects. A major takeaway from LIMRA’s research, as explained in a related press release, was that “the more engaged affluent consumers are in retirement planning consultations, the more they trust their advisor and the advice.”
With that in mind, consider the following 10 strategies for fostering more meaningful engagement with affluent clients and prospects:
Take a holistic approach. The Pew Research Center has found that affluent adults are more likely than other adults to be in the sandwich generation, providing financial support for aging parents as well as for grown children. From a big-picture perspective, consider the prospect’s sons and daughters, parents, grandchildren, favorite church or charities, biggest concerns and priorities. Affluent consumers who believe their financial professional understands everything they’re trying to achieve may be less inclined to take a stab at planning on their own.
Communicate their way. The willingness to adapt to client communication preferences (while remaining within compliance parameters), conveys a level of respect many affluent consumers have come to expect. As tailoring approaches by client generation matters, utilize age-appropriate communication methods. Keep in mind, however, that affluent clients (busy, small-business owners, in particular) may have colossal time constraints and financial professionals may therefore need to show expertise quickly.
