Francois Lombard, Head: Strategic relationships and Deal making at Momentum Wealth
Just more than a year on from the start of the COVID-19 pandemic and worldwide lockdowns, where fear gripped investors which led to an unprecedented fall in global markets, vaccines are beginning to make their way to millions of people around the globe, with many stock indices nipping at all-time highs.
While the outlook remains more optimistic than last year, many individuals are still concerned about their well-being, income and cash flow. Even very wealthy individuals are feeling uncertain about what their finances will look like in the future. In fact, one of the top things that high net worth individuals (HNWIs) state as a result of the pandemic, is to discuss their financial situation with a professional financial adviser.
While there appears to be a partial consensus among financial advice professionals as to who, exactly, HNWIs are, I will define a HNWI as an investor with more than US$1m (R15 million) in liquid financial (or net-investable) assets, excluding their primary residence, collectibles and consumables.
But how does a financial adviser successfully cater to the needs of these individuals?
The relationship game: One of the largest ever studies done on HNWIs found that 85% rated trustworthiness and honesty as the most important factors for productive relationships with a financial adviser. As with most client relationships, communication is critical to obtaining and retaining HNWIs. They need to know that you are regularly monitoring their finances and are ready to act when necessary. Showing you care on a personal level, by contacting them on birthdays and other special occasions, matters. It’s all about taking a holistic approach and offering a higher level of service than your competitors.
Customise and personalise services: We live in an age of hyper-personalisation and nowhere is this more prevalent than in the HNW space. The result of this trend is hyper-personalised wealth management, or hyper-personalised services, where advisers provide services tailored to their clients’ high expectations.
Investment management that includes non-traditional asset classes: As volatility continues in global markets, many HNWIs are looking to reduce their exposure to traditional asset classes to generate absolute returns. Some sophisticated HNWI’s are turning to alternative investments such as private equity, collectibles, wine, antique cars, infrastructure, and hedge funds to diversify their portfolios. Another noteworthy trend is the increase of capital into environmental, social, and governance (ESG) investments. Raising the subject of philanthropy with HNWIs and supporting them in the implementation of strategies that can help them build a meaningful legacy, can contribute to improving the quality and depth of the relationship.
Focus on generational wealth: Most HNWIs are conscious of the need to maintain and grow their wealth and eventually pass their wealth onto the next generation. Financial advisers, therefore, have an opportunity to support them through the inheritance planning process.
Adopt next-generation digital capabilities: Financial advisers need to deliver seamless, high-value, cross-device and fully integrated digital interactions that either keep HNWIs informed or enable end-to-end execution of transactions. Forward thinking advice practises will recognise that having the advanced digital capability is not optional and represents a disruptive force in the financial advice industry.
One of the most important ways to build trust in the HNW market is to strategically partner with an established and trusted business. Having a brand name such as Momentum Investments behind you helps to increase confidence and trust, something that is vitally important when it comes to attracting and retaining HNWIs. It is this need that has led to the creation of the Momentum Deal Forum. The Deal Forum was set up to specifically cater to the needs of your HNWIs and provides bespoke product structuring; and tax, estate and succession planning.
(1) Investment and Wealth Monitor, Your high-net-worth client strategy, it’s what they want, not what you know, By John D. Anderson and Allie Carey, accessed 04 June 2021
The information in this editorial is for general information purposes and not intended to be an invitation to invest, professional advice, or financial services under the Financial Advisory and Intermediary Services Act, 2002. Momentum Wealth (Pty) Ltd (FSP 657) is an authorised financial services provider and part of Momentum Metropolitan Life Limited