Bringing you live news and features since 2006 

HNW market is growing opportunity for US advisory practices

RELATED TOPICS​

The high-net-worth (HNW) and ultra-high-net-worth (UHNW) market has expanded at a record pace in recent years due to a combination of strong market performance and the creation of new wealth, providing significant opportunity for wealth managers able to service this segment appropriately.

That’s according to new research from Cerulli Associates which finds that as competition for the wealthiest client segment intensifies, only those firms that effectively cater to the unique service expectations of HNW and UHNW clients will be able to capture marketshare.
 
Managing the wealth of HNW clients – those with greater than USD5 million in investable assets—is understandably appealing to advisory practices; however, many firms lack the resources or capabilities to serve the high end of the market effectively.
 
“Firms must evaluate their core competencies and assess whether they have the necessary capabilities and resources before attempting to move upmarket,” says Asher Cheses, research analyst at Cerulli. “To move up the advice spectrum, advisors must move beyond portfolio management and truly reconsider how they add value to better reflect their unique skills and expertise across a wider range of financial and non-financial needs.”
 
As HNW client needs become increasingly complex, advisors must also adopt more tailored product offerings and sophisticated investment processes to align with client demands. According to Cerulli’s 2018 HNW study, wealth preservation, tax minimisation, and wealth transfer are the most important investment objectives among HNW clients.
 
“Advisers must recognise that there are certain products and strategies that are more pertinent to HNW investors, and ensure that they can provide access to more sophisticated and tax-efficient solutions to meet their needs,” says Cheses.
 
Source of wealth is also an important factor in terms of service preferences among HNW investors. Managing the dynamic between closely held/family businesses and financial assets can be a critical factor in serving HNW investors.
 
“Given their source of wealth, HNW investors are typically more confident in their ability to manage their wealth, which can be an important dynamic when developing a trusting relationship with HNW clients,” explains Cheses. Advisors catering to this market should aim to adopt more of a collaborative investment approach, in which clients are given a sense of control and input in regard to managing their portfolios.
 
Focusing on the wealthiest households requires advisory firms to think differently about their clients given the wide range of behaviours and preferences at the high end of the wealth spectrum. As advisors look to move upmarket, the need to deliver a differentiated client experience based on each client’s unique needs and expectations becomes paramount. Advisors catering to the HNW market must make a concerted effort to understand their clients’ entire financial and personal situation, unique goals and preferences, and tailor their services to these specific needs. While competition for the HNW and UHNW market is on the rise, with the right approach and service offering, advisory firms can successfully penetrate this market.

Latest News

Saving and investing app, Moneybox, has doubled the number of ETFs available on the platform, in the light of ‘growing..
Global X ETFs has announced the appointment of Ryan O'Connor as its Chief Executive Officer effective as of April 8, 2024. ..
Value-driven structured credit investing firm, Angel Oak Capital Advisors, LLC, has announced the completed conversions of two of its mutual..
Confidence in the continuing strength of bitcoin and Ethereum is driving wider interest in altcoins and other digital assets, according..

Related Articles

Sal Esposito, Zacks Investment Management
Zacks Investment Management started doing investment research in 1978 and in 1992 started its investment management arm, initially with SMAs...
Jeremy Senderowicz, Vedder Price
Jeremy Senderowicz, a member of the Investment Services Group at law firm Vedder Price, has witnessed a steady upswing in...
Graham MacKenzie, Toronto Stock Exchange
The evolution of ETFs has been a multi-decade experience for Toronto Stock Exchange says Graham MacKenzie, managing director, Exchange Traded...
Frank Koudelka, State Street Global Services
ETF data provider and ETF Express data partner, Trackinsight, has published its Global ETF Survey 2024 Report: ‘50+ Charts on...
Subscribe to the ETF Express newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by