Branding and High Net Worth Investors – Treat the Individual like an Institution

By Ray George

There has never been a better time for the financial services industry to market to the high net worth individual investor – a market sector representing over $6 trillion in assets. Such converging factors as investor flight to advice, and investor cynicism with traditional brokers like Merrill Lynch due to conflicts of interest between analysts and investment bankers, has created a point-in-time opportunity to capture these coveted assets. 

Today there is a manic free-for-all by all providers, from banks to brokers to insurance companies. But here’s the rub: In the rush to capture market share, few have taken the time to develop a solid understanding of this customer’s goals and needs.  The result has been the dilution of brand equity due to undifferentiated messages and unsubstantiated promises.

Financial services companies must extend their thinking of brands beyond mere ad campaigns and logos – brands are the sum of all interactions between a customer and a company.  A brand strategy must be built upon an intimate understanding of the customer and executed consistently across all brand touchpoints.  Amongst financial services companies, the current understanding of the high net worth customer is insufficient and requires a new perspective.

An alternative perspective is the striking similarity in behavior that high net worth investors share with a more sophisticated institutional investor, such as a pension fund manager or a corporate CFO.  These similarities appear in four areas – the investor decision process, decision drivers, customer lifecycle management and a solution vs. product approach.

  • Investor Decision Process – The high net worth investor’s decision process is goal-focused in a way that is analogous to a pension manager seeking to fulfill an investment mandate.  Various parts of their respective portfolios are focused on a variety of goals:  for the high net worth investor, these could be college savings, retirement and estate planning, similar to the pension manager with a variety of investment goals (emerging markets, fixed income, domestic equity, etc).  Each goal must be treated as a separate and distinct solution – neither the high net worth investor nor the pension manager is seeking a one-stop shop. 
  • Decision Drivers – The decision drivers for the high net worth and institutional investor are also similar.  A consultative sales approach, investment style consistency and product and service customization, are common motivators of purchase amongst high net worth and institutional investors.
  • Customer Lifecycle Management – Another similarity is the lifetime value and profitability of both high net worth and institutional investors.  Understanding the different life stages and the investor’s corresponding needs and goals will allow advisors to provide customized services to suit unique goals.  At critical inflection points like rollovers and retirement, over-delivering on personal service will help foster sustained relationships as well as evangelists for your brand.
  • Solution vs. Product Approach – Finally, companies targeting high net worth investors must look across their organizational silos to take a customer-centric approach to high net worth investors – like institutional investors, they are not buying products, but looking for solutions to specific goals.  Part of the brand promise should include the capability to nimbly apply the breadth of your expertise to the client issue at hand.

Based on these four areas of similarity, one way to successfully attract and retain a greater share of the high net worth market is to build a strong brand-customer experience.  Advertising is not the way to enter the consideration set.  Financial services firms targeting the high net worth investor must leverage high impact brand-customer touchpoints such as,

  • Leveraging the Intermediary – One key area to leverage is the emerging intermediary population between high net worth and financial services firms.  Intermediaries are becoming a critical “gatekeeper” to assets, in both the institutional and high net worth markets.  Lawyers, accountants, independent registered investment analysts play a critical influential role in the brand-customer relationship.
  • Providing Extraordinary Services – Another key leverage point is word of mouth – by providing extraordinary service to their current customers, financial services firms can generate a grassroots referral program that could drive significant asset accumulation. 
  • Getting Employees to Live the Brand – Finally, the most critical brand-customer touchpoints are employees.  Just as in the institutional space, investment mandates are won and lost on the sophistication and approachability of financial analysts and advisors.  Financial services firms must invest in employees that can deliver on the brand promises.

Brands can have significant influence in the investment decisions of the most savvy and sophisticated investors, whether they are individual or institutional.  By taking a fresh look at the high net worth investor through lens of an institutional investor, financial services firms can provide a unique brand-customer experience that will drive asset accumulation and asset “stickiness” over the long run.

A version of this article was featured in the October 2002, issue of American Banker magazine

 

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