Which of these 5 personas best describe your wealthiest clients?

Behavioural research highlights the benefits of deeper client relationships and how to identify key character traits of high-net-worth individuals

Which of these 5 personas best describe your wealthiest clients?
Steve Randall

Financial advisors often spend significant time and money attracting new clients while leaving money on the table from existing clients.

But deepening existing client relationships can be a more cost-effective and satisfying method of expanding overall business, especially with the wealthiest cohort.

New research shows that, among high-net-worth individuals, clients typically fit within one of five personas, and understanding this can strengthen advisor-client relationships.

It also reveals that the decision to invest more in managed assets is driven more by emotions than by the advisor’s resources.

The study was conducted by Northern Trust Asset Management’s FlexShares ETFs among clients with US$250K to $30 million in investable assets including in-depth interviews and an online survey.

Understanding mindset

“The question of how to gather assets from existing clients has been top of mind for years – however, there’s a lack of advice about how to understand and accommodate the emotional aspect of this decision. Our research sought to understand the underlying mindset of clients rather than simply what other services an advisor can give them,” said Laura Hanichak Gregg, Director of Practice Management and Advisor Research at FlexShares.

The study found that 63% of investors based their initial investment with an advisor on "an amount that felt comfortable" rather than an informed strategy.

Feelings of safety and being comfortable are paramount and, for many investors, conversations around these elements will inform decision making more than size or scope of an advisor or asset manager.

The 5 personas

The five personas identified by the behavioural research are:

  • The Verifier: Making up approximately 40% of the market, this is someone who generally trusts the industry and is likely to have some investment expertise. Verifiers are open to consolidating their assets with an advisor who wins their trust over time by demonstrating expertise and personal connection. Advisors can engage this group by proactively identifying any gaps in their wealth plan, having more holistic planning conversations, and offering incentives for increased assets like lower fees or access to restricted investment opportunities.
  • The Simplifier: Another common client segment (~28% of the market) is the simplifier, who prefers to have a single advisor in control of his or her finances. This client thinks of his or her investable assets as a lump sum, tends to have less investment knowledge, and generally defers to an advisor’s judgment. As simplifiers want to access as much as they can in one place, advisors should explain their complete menu of services and proactively anticipate client needs with solutions.
  • The Collector: This group (~22% of the market) prefers to spread their assets across multiple advisors to mitigate investment risk and gather different perspectives. They are nervous about “having all their eggs in one basket.” Since the collector’s key pain point is complexity across accounts, it behooves advisors to emphasize their ability to simplify financial planning through consolidation, rather than emphasizing incentives like price breaks.
  • The Protector: This client (~10% of the market) is highly risk-averse and approaches an advisor relationship with caution. Protectors may have substantial assets but are reluctant to cede control to an advisor and may prefer a do-it-yourself investment approach. Be patient to build trust with this client and focus on pursuing a relationship. Acts of selflessness like offering to help a relative free of charge or waiving a fee for service can be a turning point in building trust.
  • The Competitor: Competitors (~7% of the market) are highly outcome-oriented and prefer to have multiple advisors in order to compare performance. They closely track performance and say they will allocate more or less based on results. Focus on the dangers of chasing short-term performance. Encourage clients to think of the “long game” and the benefit of extending their investment horizon.

The full study is available at go.flexshares.com/walletshare