A report jointly published by Spectrum Group (a consulting & market research firm based in US) and Vanguard has revealed some interesting insights on why the mass affluent, millionaire and UHNW clients hire and ultimately fire advisors.
The company conducted online interviews with 1,500 mass affluent, 1,000 millionaire and 500 ultra-high net worth households in 2014. Although the research covered US residents, its findings could be relevant for India also.
The survey found that honesty and trustworthiness is the first and most important criteria for hiring an advisor. Transparency ranked the second most important criteria for hiring an advisor, followed by investment track record, fees, products and services on offer and referral.
“We found that investors will eventually hire through a referral from family or friend but it’s reasonable to assume that doubts about your level of transparency can be a deal-breaker at any stage,” states the report.
The fact that trustworthiness is an important criteria for the ultra-rich was validated by the 48% self-directed millionaires who don’t use the services of advisors because they think that advisors won’t be looking out for their best interests.
To tackle this, the report suggests that advisors should evaluate their opening pitch by focusing on factors that matter the most. “You may assume that honesty is a given, but earning trust may require more effort than you expect,” states the report.
Why would they fire you?
While it is important to know why prospects hire you, it is equally important to be aware of the factors which turn them off.
The survey found five key reasons why the ultra-rich fire advisors. Of the five reasons, four were related to communication gaps.
Here are the five reasons why they may fire you:
- Not returning phone calls in a timely manner
- Not being proactive in contacting clients
- Not giving good advice and ideas
- Not returning emails in a timely manner
- Underperformance compared with market
To improve your communication, the report suggests that you should reprioritize their efforts by using model portfolios which can free up time and allow you to be more accessible to clients and get to know them on a deeper level.
