In the wake of the improprieties and scandals of the past few years, the financial services industry is abuzz with talk of ethics and image. One of the key questions firms are asking is what role, if any, branding plays in their credibility and in their efforts to court and keep affluent clients.

Differently put: Are today's high-net-worth clients attracted or, at best, ambivalent, to big name financial services firms? One could argue that, given the negative headlines of the past few years and the desire of the affluent for preferential treatment, low-profile financial services firms are more appealing than those with a household name.

This branding issue is at once simple and complex, with far-reaching implications for financial services firms, for their advisors and for the many advertisers and marketers that rely on the millions of dollars spent each year to reach America's investors.

Names Matter

According to our research, branding does matter to a meaningful percentage of affluent investors when they're choosing their financial advisors. Further, and perhaps more importantly, branding also matters to “centers of influence” — the attorneys and accountants who frequently refer high-end clients to advisors. Our research also shows that branding matters even more to investors after they have made their choice.

Broadly speaking, branding helps firms (and advisors) directly cultivate the affluent who are attracted by the firm's name and all that is associated with its image — success, experience, security, stability, etc.

Our research involved 438 investors with at least $2 million in investable assets (with a mean and median of $8.1 million and $5.2 million in investable assets, respectively). We asked these investors about the importance of brand in their evaluation and choice of their financial services firm. We found that just over half believed the firm's brand was “extremely important.” It should be noted (by way of reference) that the surveyed investors had, on average, 2.7 advisors each and that their primary advisor was defined as the one managing the largest share of the investor's assets.

About 14 percent of surveyed investors said a firm's brand was “extremely important” when choosing a primary investment advisor. Over 36 percent cited the brand's “extremely important” role in their choice of their other investment advisors.

Over half of those who thought branding was important were with high-profile financial institutions (nationally or regionally well-known brokerages, private banks or money managers.) All of these firms engaged in significant advertising and public relations activities — that is, branding. And importantly, each of these firms had a business entity dedicated to the high-net-worth market.

We then conducted a series of focus groups with 38 of the affluent investors who said they found branding to be decisive when selecting an advisor. It turned out branding played an even more important role after they had chosen their financial advisor, as they became more aware of the firm's branding efforts and began to pay more attention to them. Whether it was an advertising campaign or media coverage, they felt validated each time their brand was mentioned or promoted.

Journey to the Centers of Influence

We then turned to what we saw as the other key target of branding, centers of influence.

In our previous research, we've found that the attorneys and accountants who work with the affluent are among the best — if not the best — source of referrals. For example, in our study of 743 wealthy women with average investable assets of at least $5 million, 69.9 percent relied on their accountant or attorney for guidance when it came to finding an investment advisor. The next most important source, business associates, finished a distant second at 16.3 percent.

And there were usually plenty of assets for each referral made. For instance, in one study of 619 private client lawyers (defined as those getting 51 percent or more of their revenue from high-net-worth clients), there was an average of $2.7 million in investable assets for each referral made. For accountants, based on a separate study, the figure was an average of $900,000 for each referral.

A closer look at the attorneys shows that branding plays a crucial role in those referrals. In a study of 311 private client lawyers, we found that, both for fiduciary reasons and in the name of objectivity, a very healthy 93.4 percent of them typically directed an affluent investor to three or more candidates for financial advisor services. Of those offering up more than one candidate, 95.5 percent always included at least one advisor from a well-known financial institution. For 30.3 percent of that group, all of the recommended advisors were from well-known, well-branded firms.

Of course, coming from a name-brand firm is not enough to win business. Only 5.4 percent of those who found branding “extremely important” chose an advisor based on the brand alone. Any recommended advisor will still have to connect with the prospect before being invited on board. But, based on our research, a high-profile firm has a good chance of being instrumental in getting an advisor through the door, showing that branding does indeed still matter.

Writers' BIOS: Russ Alan Prince is president of Prince & Associates.

Hannah Shaw Grove is managing director at Merrill Lynch Investment Managers.

Brand Shopping


Affluent investors who said a firm's brand was “extremely important” when choosing a primary investment advisor.


Affluent investors who said a firm's brand was “extremely important” when choosing one of their investment advisors, but not their primary advisor.

Source: Prince & Associates