High net worth clients are those with at least $2 million of investable assets with a financial advisor, according to PriceMetrix. But only 5 percent of U.S. retail investors fall into this category, with the median household holding only $210,000.
High net worth clients tend to have portfolios that are more diverse than the non-HNW client; they are more likely to hold both transactional and fee-based accounts, and are weighted more towards a mix of single securities rather than mutual funds.
High net worth clients are generally attracted to experience. Generally, advisors with less than five years of experience have only one high net worth client, while advisors who have been in the business for 25 years have eight or more high net worth households on average.
Most HNW clients didn't start with an advisor when they were less rich;
most were already wealthy when they started working with a firm.
Advisors with too many sub $250,000 accounts tend to not have as many HNW accounts. PriceMetrix found firms with 40% or less of their business devoted to small investors tend to have the larger number of HNW clients.
Don’t aggressively lower prices to attract high net worth clients, there’s no benefit, PriceMetrix says. With revenue from assets on fee-based accounts, the optimal range for high net worth clients is between 0.5 percent and 0.99 percent.
Attracting and retaining high-net-worth clients is an aspiration for most, but it can be tricky. A report from PriceMetix released Wednesday puts some numbers behind the firms that are successful at landing top tier clients.
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