It’s stating the obvious, but advisors would do well to remember that people like nice things.
Whether it’s high-end travel, posh fashion or luxury automobiles, it’s not a stretch to say clients and prospective clients want material things that they perceive as glamorous. There’s nothing wrong with that. It’s part of capitalism.
Advisors should take heed because the wealth management industry is rapidly evolving into an aspirational and experiential segment in its own right. That’s not something for advisors to fear nor does it many offices need to have Dom Perignon on tap. Additionally, it doesn’t mean that advisors need to focus entirely on high-net-worth clients.
For advisors looking for a real world playbook on how to frame wealth management as an aspirational/experiential endeavor, consider Tesla (NASDAQ: TSLA). When Elon Musk’s company started producing cars more than 15 years ago, it’s intent – one that remains in place today – wasn’t to be an alternative to the Fords and Hondas of the world. Rather, Tesla went (it still does) after Audi, BMW and Mercedes drivers.
Advisors should think along those lines. Again that doesn’t mean a dedicated focus on the most affluent clientele. Rather, it means positioning wealth management in such a way that it feels aspirational to all clients.
More Lessons to Consider
An easy step for advisors to take on this front is understanding why clients like “premium.”
“There are reasons people shell out premium prices for a cup of coffee at Starbucks, rooms at The Ritz-Carlton, Apple products and trips to Disney World,” notes WisdomTree. “Yes, the products offered by these firms are excellent, and yes, they all deliver good service, but the reason these firms are so successful is that they understand their customers do not keep coming back to buy a product—they are paying for an experience.”
Obviously, advisors don’t sell tangible goods. Rather, this is a service-oriented business. And as the Apples, Ritz Carltons and Teslas of the world confirm, clients want excellent service.
“The value proposition decreasingly focuses on products or services, which are assumed or taken for granted,” adds WisdomTree. “Increasingly, the emphasis is on the quality of the advice, the level of expertise delivered, the ease with which information and service can be accessed—the wealth management experience enjoyed by the client.”
Consider the experiential element of advisory services this way. Yes, clients love the experience of a glamorous hotel or fancy restaurant, but those experiences are fleeting. High-quality advice and advisor relationships with an “experience” feeling have greater implications, more relevance and larger rewards.
Perfect the Platform
Advisors looking to elevate the experiential side of their practices should consider the state of the platforms through which their providing advice and services to clients.
Consider a flywheel approach that asset allocation, bespoke portfolio construction, comprehensive wealth planning, consolidated performance reporting and exposure to both traditional and alternative asset classes, among other factors. Take some tips from WisdomTree.
“Think of integrated wealth planning as a three-legged stool. One leg is the traditional concept of asset allocation—diversifying investments across multiple asset classes in such a way as to minimize the risk of the portfolio for an expected or desired level of return,” concludes the ETF issuer. “Many advisors today still ‘sell’ asset allocation as the be-all and end-all of investment planning. But traditional asset allocation ignores two inconvenient aspects of dealing with individual investors—they pay taxes, and they frequently behave irrationally with respect to their wealth.”
Related: Preparing Clients for 2024 Elections