The affluent market has been a primary focus of the financial services industry for years. Marketing campaigns have come and gone as many advisors find themselves challenged in their attempts to penetrate this profitable niche.
My firm has researched the affluent for well over a decade and with all the data we’ve uncovered and published in white papers and books, it appears that misconceptions regarding today’s affluent persist.
In an attempt to set the record straight, I’m going to debunk 10 common stereotypes advisors have regarding the affluent.
1. The affluent are different. Not so. 92 percent of today’s affluent are self-made and come from some form of middle-class background, they are not Trust Fund babies. Whether they have $1 million or $20 million, they don’t think of themselves as affluent. They have middle class values embedded in their subconscious. Just like you and me.
2. Affluent are all Republicans. All you need to do is to think of Warren Buffett and Michael Bloomberg to dispel that myth. Today’s affluent have a mixed political affiliation and have placed politicians, all politicians, at the lowest ranking for trust.
3. The affluent don’t do business with friends. Over three-quarters of today’s affluent are willing to work with a financial advisor who is a friend; 84 percent of men and 77 percent of women. The key is competency and professionalism.
4. Advertising works the same amongst all wealth groups. Hardly. This myth is one of the reasons so many financial advisors struggle marketing their services to today’s affluent. They are more educated, highly skeptical, don’t trust advertising claims, and do not like sales people. They have their guard up for anything that seems like marketing or sales. Word-of-mouth influence, reputation, and personal introductions within affluent spheres-of-influence are key to affluent marketing.
5. The affluent don’t want all their eggs in one basket. That’s yesterday’s world. Now the affluent want a “go-to” financial advisor they trust to oversee every aspect of their family’s financial affairs. They don’t expect their advisor to be an expert in all areas, rather to bring in qualified experts when necessary.
6. Investment performance is everything. Meeting investment performance expectations is important, but it is one of the 14 statistically significant criteria they rate important. The key to investment performance with today’s affluent is in managing expectations.
7. The affluent are very secretive. Totally false. Word-of-mouth influence is one of the major impact factors in today’s affluent decision making. They talk to each other about their likes and dislikes. Granted, they’re not likely to discuss details of their family’s financial situation but they will recommend their financial advisor.
8. The affluent don’t have to worry about money. Whether or not they have to worry isn’t the issue, today’s affluent want their financial advisor to “protect their family’s investments from downside risk.” This is one of the 14 statistically significant criteria ranked as important. Today’s affluent are very concerned about maintaining their lifestyle.
9. You need an expensive brochure to showcase your services. Save your money. Our latest research tells us that brochures have zero, nada, impact on today’s affluent selecting a financial advisor. The advisor is the brand, the product.
10. Social media is for the younger generation. Tell that to a 60 year old grandmother who is sharing pictures of her grandson with her financial advisor on Facebook. According to the Pew Research Center seniors are the fastest growing segment of Facebook users in the U.S., projected to be at 55 million by 2020. Today’s affluent of all ages are becoming increasingly more comfortable interfacing with social media sites.
There is no time to harbor any false-beliefs regarding today’s affluent. Elite advisors don’t. They understand how today’s affluent think, how they make decisions, and what they’re looking for from their financial advisor. This enables them to excel at managing their affluent client relationships and engage in relationship marketing by penetrating their client’s spheres-of-influence (relationship marketing).
The better your understanding of today’s affluent, the more successful you will be in working with them.
Matt Oechsli is the author of The Art of Selling to the Affluent. His firm, The Oechsli Institute, does ongoing speaking and training for nearly every major firm in the US. @mattoechsli www.oechsli.com
