In order to build and maintain long-term business relationships with their ultra high net worth clients, financial advisors need to be most concerned with the investment performance they are delivering, according to new research by Phoenix Marketing International.
To some, this conclusion may seem a bit obvious, but it doesn't apply to all wealthy clients. The research found that while the loyalty of ultra high net worth clients (with $5 million or more in investable assets, or $10 million or more in net worth) could be earned best by superb investment performance, loyal relationships with mainstream affluent investors (with less to invest) are built on the relationship with the advisor: the quality and frequency of communications, the ease of doing business, and the quality of the service and problem resolution.
Engaging in financial planning with the advisor is also instrumental to the loyalty-building process for most affluent households. For the mainstream affluent, performance was way down on the list of important drivers of loyalty.
No cruise control
The research data has consistently shown that even though many of these ultra high net worth households have amassed very impressive investment portfolios, they are not content to sit back and put their wealth on cruise control: aggressively growing wealth is an important goal for many of them.
The Affluent Marketing Service (AMS) programme provides a twice yearly summary of affluent and high net worth household investment, financial and affluent lifestyle behaviours and attitudes.
The data described was drawn from a special Phoenix report that will be published during December 2004, entitled 'Focus On The High Net Worth Investor', which details the investment behaviours, needs, attitudes and size of the market of households with US$5 million or more in investable assets, or US$10 million+ net worth.
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