Every year we conduct an in-depth study of affluent investors, and the insights garnered from our 2012 Affluent Investor Study likely are going to change how financial advisors go about their business.

We are witnessing two changes that are so large and significant that we refer to them as macro affluent shifts. These two findings have fundamentally changed the advisor/affluent client relationship. The first involves gender while the second involves the advisor/client relationship directly.

Regarding gender, a strong case can be made that it's becoming an affluent woman's world, and this goes beyond the basic demographics of women outliving men. Today's affluent women are currently taking a more active role in every aspect of their family's finances. Two key facts provide the context for this particular macro shift, which we've labeled the Affluent Gender Shift:

  1. Affluent women place greater stress than men on most of the statistically significant criteria ranked as “important” regarding their financial advisor relationship. (I will write about these specific criteria in Practice Management e-letters and a future issue of Registered Rep.)

  2. Affluent women have higher expectations than men regarding the performance of their financial advisor as it relates to these “important” criteria.

In other words, not only are today's affluent women more involved in their family's finances, they also have higher expectations of their advisors and as a result are harder to please. These realities are far-reaching and at the very minimum make it critical for financial advisors to spend more time and attention on the women of their affluent client households. And this must be accomplished on both a business and social level. Which leads me to our second macro affluent shift — the Affluent Relationship Shift.

It appears that today's affluent investor wants more than just a business relationship with his or her financial advisor. Investors now want a business and social relationship. How can we be so sure? Because our 2012 findings paint a clear picture of how today's affluent rate the performance of their financial advisor regarding the areas our study identified as important to them. And there is a statistically significant difference between advisors who have only a business relationship and those who have both a business and a social relationship.

Advisors with both a business and social relationship are exceeding expectations in most of these areas. Below is a sampling of a few of our criteria ranked as “important” by investors and the corresponding advisor performance rankings. What is notable is the higher ranking for advisors with a business-social relationship.

Affluent Area of Importance

Possessing a breadth and depth of industry knowledge

  • Business-only relationship: advisors not meeting expectations.
  • Business-social relationship: advisors meeting expectations.

Delivering high-level personalized service

  • Business-only relationship: advisors meeting expectations.
  • Business-social relationship: advisors exceeding expectations.

Creating and executing an up-to-date formal financial plan

  • Business-only relationship: advisors not meeting expectations.
  • Business-social relationship: advisors exceeding expectations.

For many advisors this will be a sea change, as they will find themselves forced to spend more time socially with their affluent clients. For advisors who already interact with their affluent clients socially, it's important that they make certain to include both spouses.

In today's environment, the trust issue is as important as it is fragile. With a business-only relationship, it appears that affluent investors don't feel as though they know their advisor well enough to entrust all their family's financial affairs. It seems that being able to know their advisor on a personal level helps fill this trust void.

The solution is simple — socialize with your affluent clients, include husband and wife in both business and social interactions, and do so while working diligently to meet their expectations at every level.


Matt Oechsli is author of Building a Successful 21st Century Financial Practice: Attracting, Servicing & Retaining Affluent Clients. oechsli.com.