Attracting Affluent Entrepreneurs – Episode 23
You’re probably aware that high-net-worth entrepreneurs are a great cohort to work with, due to their significant wealth and the broad range of financial issues on which they need advice and guidance. Many top advisors focus exclusively on serving this niche.
But you might not fully realize just how big an opportunity affluent business owners could represent to your success right now. If you can demonstrate to entrepreneurs that you have the skills and resources needed to serve them exceptionally well, you can win far more than your fair share of this highly attractive market.
CEG Insights recently surveyed more than 1,600 affluent entrepreneurs in various industries (including professional services, retail and manufacturing). Here’s what we learned—and what our findings could mean to the future of your practice.
KEY TAKEAWAYS
- Many entrepreneurs are looking to switch advisors.
- The majority want an advisor who can address professional and personal financial concerns.
- Build a network to deliver the solutions that business owners expect.
FACE THE FACTS
Today may be the best time in recent history to court affluent business owners. The reason: Many aren’t satisfied with their current situations. Our latest research found that 20% of the entrepreneurs we analyzed, who average $15.6 million in assets, say they are very likely to change their current financial advisors within two years—while another 18.4% say they’re somewhat likely to switch their primary advisor (see Exhibit 1).
Exhibit 1
What’s going on here? Among the wealthiest entrepreneurs—those with $5 million or more of net worth—their dissatisfaction largely boils down to performance: 45.2% of these business owners simply aren’t happy with how their wealth is being managed. What’s more, close to one-fifth are unhappy with the level of communication they’re getting from their advisor (see Exhibit 2).
Exhibit 2
Note, however, that fees are not a big factor at all. One of the characteristics of entrepreneurs that make them an attractive market is that they’re less fee-sensitive than are many other niches.
A key preference we see among affluent entrepreneurs is the desire to engage the same advisor for guidance with both business financial needs and personal financial needs. A full 57% of business owners want one advisor to address both aspects of their lives. In particular, the services most wanted by these clients include:
- Investment management (expected by 72.4% of entrepreneurs)
- Financial planning (65.8%)
- Tax-planning advice (54.7%)
- Estate planning advice (50.6%)
- Business succession planning (26.7%)
INSIGHTS INTO ACTION
Clearly, a large percentage of affluent entrepreneurs believe they’re not receiving adequate advice and results from their existing primary advisors—as evidenced by the fact that nearly 40% of them are inclined to switch to new advisors soon.
With that opportunity in mind, consider these action steps:
- Take a holistic approach. Business owners want advisors who can offer guidance on their professional and their personal financial concerns. If you want to get a foothold in this market and create greater client loyalty, you need to go far beyond investment management as your main value proposition by expanding into areas such as tax and estate planning—on the business and the person side.
- Build a network. The good news is that you don’t need to become an expert in all the areas that affluent entrepreneurs need help with. But you do need to offer that broad expertise. Creating a network of experts and working closely with them on behalf of your clients is one of the best ways we know to deliver the truly holistic wealth management business owners clearly seek.
Bonus: Professional networks can be an excellent source of referrals that enable advisors to grow the ranks of their successful business owner clients.
3. Enhance your communication skills. A sizable percentage of entrepreneurs are unhappy with their advisors’ level of communication with them. Take the time to understand how affluent business owners want to be communicated with (method, frequency, etc.) and demonstrate to them that you have a formal approach to ensuring consistently strong communication.
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