Tailoring an advice offering for HNWIs

Focusing solely on investment performance is a turn-off for high-net-worth individuals (HNWIs) who are seeking a more well-rounded, personalised offering from their adviser. 

HUB24’s high net worth white paper examined the differences in servicing retail versus HNW individuals, which are 21.7 million globally and around 635,000 in Australia. 

Personalised offerings and service quality are the most important criteria when selecting a financial adviser, outranking financial expertise or investment performance, according to research by Capgemini.

As part of this focus on service quality, HNWIs expect a responsive service which may require a firm to increase its resources to meet their demands quickly. Many will have already been used to running successful businesses or “being the smartest person in the room”, which means they are focused more on maintaining their existing wealth rather than growing it.

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The report stated: “While investment management is undoubtedly a core service required by HNW clients, it is likely to be simply one of many utilised in solving their problems. Centring the benefits around investment management to HNW investors is likely to dilute rather than strengthen the advice proposition in the eyes of these clients.

“Whilst they don’t necessarily require more ongoing attention, when they need help from their adviser, they expect responsive service. This has cost and resourcing implications for advice businesses, as it means creating enough capacity to be able to respond as soon as needed—to situations that can be complex.”

They also expect their adviser to act as a “connector” between them and other specialists, including lawyers, accountants, brokers and tax experts. Areas where these HNWIs seek specialist expertise range from tailored portfolio construction to business succession planning and private banking.

“The leading advisers in this space act not as oracles who ‘know it all’ but as the directors of a matrix of providers and experts who all work together to support the needs of HNW clients.”

HUB24 also noted that a large volume of assets doesn’t necessarily correspond with a client being classed as a sophisticated or wholesale investor.

“Many advisers take advantage of the ability to work with clients on a wholesale or sophisticated investor basis in order to streamline processes and open up a wider range of investment options for their clients. But wealth doesn’t necessarily equate with financial literacy, and some HNW clients will be more suited to a retail approach.”