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Insight


By Liz Nickles

Change is not just in the air. It’s hit the ground running—already in the DNA of what was once a seemingly impenetrable group—the elite, high net worth client. Driven by a spectrum of factors from gumption to globalization, today’s most affluent men and women are forging a new profile that wealth managers and financial institutions must not just acknowledge, but embrace, creating products, services and experiences that meet the needs of this transformational group. Financial advisors who  really want to know their client had  better get to know the new new client. Here, a capsule summary of key concerns:

1—The New Rock Star The new new client isn’t looking for a rock star on You Tube; he or she is looking at next seat on their side of the desk, for a financial advisor who helps them make investment decisions, plan asset allocation or provide due diligence regarding investment products and strategies with no agenda except the client’s. Ninety-six percent of affluent women surveyed by the Family Wealth Advisors Council in 2012 said they want their unique circumstances and entire life picture understood by their financial advisor. In an increasingly complex financial landscape, the advisor who helps clients make empowered decisions has the star power, day-to-day and for the long term.

2—The New Family Actually, the Brady Bunch was prescient. The new new family is the blended family. The divorce rate is now combining with longer life spans and a global economy to increase the likelihood that two previously-married parents will unite children from former marriages into one unit- -sometimes more than once. Research shows that couples experiencing increased net worth are at a greater risk for divorce, and also more likely to remarry.  Added to this is the increase in cross-border marriage. The new new family requires a proactive platform to protect assets on all sides, and fresh strategies for how to equitably consider the hard and soft dynamics of intricate estate and wealth transfer issues.

3—The New Woman Women have left the HNW gate, and financial services that do not just include, but proactively address, them are going to be left behind. HNW women are 39% of top U.S. wealth-earners.  Senior women (50+) control $9 million net worth and own more than ¾ of the nation’s wealth and 70% of all money market accounts and certificates of deposit. In Britain, women are 46% of the 376,000 millionaires. As Freud, for once short on answers, once asked: What do women want?  The new woman client wants a financial advisor who really understands her needs. So far, at least 80% don’t see that happening—today, only 20% of HNW women even use a financial advisor.  Family, children, senior parents, values, entrepreneurial business and philanthropy are all keys to the new HNW woman.  But so are the same hard financial issues that impact and interest their male counterparts. Wise financial firms will step up: women are going to have more money longer—due to longevity, they will inherit 70% of all estates.

4—The New Bottom Line The Bottom Line used to be one-word simple:  profit. But as the Baby Boomers mature into senior-hood, and their children, Generation Y, come into adulthood, a new Triple Bottom Line has surfaced: planet, profit, people. Particularly notable among HNW’s, planet and people represent the new new client’s value shift to a more inclusive paradigm. Giving back means not just writing a check, but participating interactively—on the web, in a run or physical activity, wearing a pin or bracelet, forming or joining a giving circle, or just showing up. Gen Y takes it a step further and will actively avoid brands that do not demonstrate a commitment to giving back.  It’s not just about money anymore. 

 5—The New Legacy How is legacy defined?  The legacy of the new new new client increasingly includes preserving his or her values, as well as financial assets, and passing them along to the next generation. A recent Harris Interactive Poll of men and women age 40 – 59 revealed that 77% said that knowing their parents’ values was very important, while only 10% said it was important that they inherited financial assets from their parents. The new will is an ethical or values will, in which an individual addresses issues of the heart and soul.  Today, many clients are finding that, for them, fulfillment goes beyond the financial, and the new definition of wealth encompasses the wealth of life.

6—The New Net The new new client is a growing presence in cyberspace. 38% of HNW’s have visited at least one social media site in the past 24 hours, and 40% prefer social media to the phone. 36% would rather get information from their financial advisor via social media. The number of HNW’s on Facebook doubled from 2010 to 2011, to 46%.

 7—The New Roadmap A manufacturing plant in Peru.  One child in school in China, another in New York.  Homes in 4 countries.  Accounts on 3 continents.  With 28% of HNW’s overall having residences in foreign countries – as many as 46% in Europe and 80% in the Middle East, and 19% having children living abroad, clearly not just the business or the outlook, but the lifestyle, of the new new client is pan-global, and with that comes a new set of needs. It’s a holistic picture, and one that expands the touch points of the client experience to 360-degrees. The world map is the new roadmap. Are you ready to navigate?

8—The New Retiree It may not be a matter of who, but whether.  Earned wealth is growing faster than inherited wealth with, according the the Merrill Lynch Cap Gemini World Wealth Report, earned wealth the primary wealth source (37%) of HNW’s vs. inherited wealth (18%). When they turn 50, HNW’s and UHNW’s will have decades of life ahead of them. And cashing out of a business today may mean a chance to find and fund a new venture, rather than fall back on the retirement plan.  The new new client mind set is far from the rocking chair and the gold watch.

9—The New Next The Baby Boomers have not left the building, but the next generation is already not just in the house, but mobbing center stage. Generation Y, comparable in size to the Boomers, is in line to inherit the largest wealth transfer in history-- $41 trillion. They are brash, bold, passionate and fickle. They will not dutifully follow their parents to the bank—in fact, Nickles & Ashcraft’s Gen Next Study revealed that 90% of HNW’s age 20 to 30 change financial brands upon inheriting. Firms who give Gen Y short shrift are putting their future assets at risk. And don’t count on the parents. According to a 2011 U.S. Trust/Bank of America survey, many HNW’s have not given any real thought to their legacy planning.

10—The New Partnership The door to the new relationship may have been opened half a century ago by John F. Kennedy, who was known to have prioritized this question about those he met:“What’s he like?”  The new new client requires an up close and personal approach that examines life needs as well as financial needs—in fact, the two are usually seamless. Products without purpose will fall flat. Capital without context is shallow. The new relationship involves delving and understanding; psychographics, not just demographics; collaboration and empowerment; strategies and tactics, not didactics; needs-based services, delivering beyond platform capabilities.  The new new client wants not a relationship manager, but a relationship partner. And the new client experience is one of 360 degrees.

Comments or questions? I'd like to hear from you. liz@nicklesblacklabel.com

© 2017, Liz Nickles & Associates, Inc.

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