The key to developing strong, long-term client relationships that lead to referrals and asset growth lies in helping clients feel that their total wealth, in all its forms, is protected. Clearly, that’s hardly a top-secret formula, but many advisors often overlook the full wealth picture.
Clients tend to envision their wealth holistically. For most, wealth is a mix of financial assets — stocks, bonds, mutual funds, and annuities — as well as homes and other properties, businesses, cars, boats, jewelry, artwork and sometimes even their baseball card collection.
Whether the risk is running out of money in retirement or water damage to their home, clients want their financial advisor to be looking out for them. In fact, a recent study by Chubb found that 77% of successful clients expect their financial advisor to understand their property and casualty risks, even if the advisor is not an insurance expert. But the same study found that only 28% of financial advisors currently have that understanding.
Yet female advisors tend to look at wealth holistically. A 2018 Cerulli study found that female investors tend to mention specific financial goals when discussing investment objectives, whereas male investors are more likely to say that outperforming the market is their top priority.
That may be because women usually look at life through the prism of family and seek to insulate family members from risk. Regardless of the financial decision — buying a house, planning for a child’s education, saving for retirement or caring for elderly parents — protecting family members is usually top-of-mind when women think about money.
Additionally, according to a 2017 report by the consulting firm EY, women investors view achieving their personal goals, which typically include the protection of family members in the broadest sense, as more important than even investment performance.
While female advisors are just as interested in investment performance as male advisors, what often differentiates them is their 360-degree view of wealth management, with its concern for risk identification and mitigation.
This holistic approach supports the development of lasting, long-term advisor-client relationships and the positioning of the advisor as a “financial quarterback” — which is important to 85% of clients, according to Chubb data. The good news is that all advisors can adopt this approach.
First, start thinking about wealth beyond investments. Consider all risks clients face, including their often-overlooked property risks. Research finds that more than 70% of advisory clients never have had a professional risk assessment of their home, 76% lack flood insurance and 62% lack jewelry insurance.
Second, think of casualty risk. As clients accumulate wealth they become targets for lawsuits. Given our society’s high level of litigation and the rising cost of settlements and jury judgments, clients must have sufficient levels of coverage in place to protect their assets. Failure to do so can decimate financial assets and threaten retirements.
Helping clients to understand their exposures and the best ways to protect their families and the assets they worked hard to accumulate does not require that financial advisors become insurance experts.
What works, first, is being aware that clients welcome your interest in their total risk posture. Next is developing relationships with a property and casualty expert who can assess your clients’ risks objectively and offer sound advice.
Such relationships can be as valuable to clients as your relationships with accountants and attorneys. Yet according to Chubb’s study, just 37% of financial advisors have a relationship with a P&C agent or broker.
Significantly, 40% of financial advisory clients would consider switching to an advisor who has such relationships, including 16% who would make the change even if the advisor charged more.
Now that the “secret” of so many successful female advisors is out in the open, isn’t it time for advisors regardless of their gender to use a holistic wealth management approach that’s proven to work?
Fran O’Brien is division president, North America Personal Risk Services, Chubb. Email her at [email protected]