Strategy Highlights
Week 4
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Strategy 2: Implement Wealth Management
Levels of affluence
In The Elite Wealth Manager, we define three distinct levels of affluence:
- The affluent (investable assets: $1 million-$5 million)
- The super affluent (investable assets: $5 million-$25 million)
- The ultra-affluent (investable assets: more than $25 million)
Many financial advisors focus on the mass affluent—a group we define as having between $100,000 and $1 million in investable assets. While this might appear to be an attractive market at first glance, it has clear limitations. It is exceedingly difficult, if not impossible, to profitably provide a comprehensive wealth management experience to clients with this level of investable assets, particularly those at the lower end of this range. To make a significant impact on your clients’ lives, on your practice and on your own quality of life, you will need to serve clients with more wealth.
For a great many financial advisors, the affluent stratum represents the “sweet spot” for clients and prospective clients—the one where they can most effectively add substantial value to their clients’ financial lives. For this reason, we will focus on those in the affluent category throughout The Elite Wealth Manager. The wealth management client experience you will build throughout this program will meet the needs of clients at this level extremely well.
The nine high-net-worth-personalities
To determine the right affluent clients for your practice, and then to employ the systems that will consistently meet their particular needs well, you have to go deeper. You need to understand what we call “high-net-worth psychology”—a framework for understanding what affluent individuals want from their money and their financial advisors.
High-net-worth psychology revolves around an understanding of the nine personality types of affluent individuals. Here is overview of the most important needs, values and motivations of each personality:
Family Stewards
- Dominant focus is to take care of their families.
- Conservative in personal and professional life.
- Not very knowledgeable about investing.
Independents
- Seek the personal freedom money makes possible.
- Feel investing is a necessary means to an end.
- Not interested in the process of investing or wealth management.
Phobics
- Are confused and frustrated by the responsibility of wealth.
- Dislike managing finances and avoid technical discussion of it.
- Choose financial advisors based on level of personal trust they feel.
The Anonymous
- Confidentiality is their prominent concern.
- Prize privacy for their financial affairs.
- Likely to concentrate assets with a financial advisor who protects them.
Moguls
- Control is a primary concern.
- Investing is another way of extending personal power.
- Decisive in decisions; rarely look back.
VIPs
- Investing results in ability to purchase status possessions.
- Prestige is important.
- Like to affiliate with institutions and financial advisors with leading reputations.
Accumulators
- Focused on making their portfolios bigger.
- Investments are performance-oriented.
- Tend to live below their means and spend frugally.
Gamblers
- Enjoy investing for the excitement of it.
- Tend to be very knowledgeable and involved.
- Exhibit a high risk tolerance.
Innovators
- Focused on leading-edge products and services.
- Sophisticated investors who like complex products.
- Tend to be technically savvy and highly educated.