Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
What should financial advisors do to attract and retain high-net-worth and affluent investors? One word: personalization.
Two-thirds of high-net-worth investors revealed in a survey that they want more personalization in their wealth management relationships, particularly in financial planning. To create “sticky” relationships with your clients, offering additional services to create a more comprehensive financial planning experience is a necessity, especially given that 32% of millionaire investors would leave their advisors if they didn’t provide financial advice outside of investments.
But personalization on its own is vague. What personalization do these clients want, and how can advisors implement those services and features into their financial planning offering without stretching their time or budget?
Value-added services
One survey found that 89% of ultra-high-net-worth individuals prefer receiving value-add services from a single source. Additionally, 46% of high-net-worth investors revealed in a survey that they planned to change wealth management providers or add new wealth management relationships in the next 12 to 24 months, or both. And over the past three years, 39% of those same respondents said they had already switched and/or established an additional relationship.
One of the top three reasons high-net-worth clients switch? They want access to different products and services. Many of the respondents said they were looking for “wealth management adjacent services” like tax planning, trust and estate planning, and healthcare planning. This is further supported by a survey of financial advisors; when asked which areas were of greatest concern for their clients, the top responses from financial advisors were retirement funding (95%), healthcare costs (95%), and tax burden (95%).
How can advisors incorporate those services in-house while remaining hands-off?
Tax planning
Envestnet found that high-earners (28%) and high-net-worth individuals (30%) are significantly more likely than affluent Americans (18%) to say that taxes are a major barrier preventing them from reaching their financial goals. Other studies have found that 92% of those surveyed expected tax planning advice from their financial planning professional, but only 25% of clients received that service. Unsurprisingly, not meeting client expectations has consequences. This is partly why the adoption of tax planning has been high among financial planning firms over the last few years. One LPL Financial study found that top advisors were 41% more likely to offer tax planning and strategy.
Some firms choose to hire an in-house person, or even a whole team, to offer these services. This can be a great option, but several technology partners are also available as a tax planning solution. Companies like Holistiplan, Corvee, and NaviPlan, for example, make it easier for financial planning professionals to offer tax planning. It’s taken off as a popular value-added service for comprehensive financial planning, as evidenced by the 25,000 advisors on Holistiplan’s platform alone.
But tax planning isn’t the only non-investment service clients want.
When asked which areas were of greatest concern for their clients, the top responses from financial planning professionals had tax burden and healthcare costs tied at 95%; which leads us to our next value-added service advisors can offer in-house via technology.
Healthcare planning
This is the comprehensive overview and optimization of clients’ present and future healthcare costs based on personalized needs and budgets. Healthcare planning is the practice of finding cost savings opportunities at multiple points in a person’s life. Healthcare planning can be as complex as an analysis of different plan options and how each plan works with a client’s health needs, budget, and other important factors, or as simple as a conversation about how best to use a client’s health savings account funds.
Approximately 40% of those surveyed said they’re looking for insurance advice as a product/service beyond core investment management, and in a different survey, 65% of respondents said they expect their financial advisors to offer guidance on health insurance. Despite this expectation, only 4% of respondents reported receiving health insurance guidance from their advisors. There’s a great opportunity for financial planning professionals to stand out from competitors by offering a unique service before it becomes more widespread. Beyond that, healthcare costs are a top concern for clients at all asset and income levels.
There are several “tech-enabled” Medicare agencies, but most of them sell insurance plans. This means the guidance clients receive is biased, and the options presented to clients could be limited if the vendor isn’t authorized to sell all the available plans in a given area or doesn’t want the overhead of doing so. Choosing a healthcare planning software company that doesn’t sell plans ensures your client receives an accurate, unbiased, and highly personalized analysis of their optimal health plan options.
The advisory profession has trended towards fee-only billing, and your healthcare planning should be no different. You can check out some of the options on the Kitces tech map, where healthcare planning is a new category as of only a few months ago. Further, healthcare planning was a category for the first time ever in 2024’s T3 survey.
Estate planning
A CEG Insights study found that 93% of those surveyed expected their advisor to help with estate planning, but only 22% received that service, and 94% expected to receive trust services, but only 10% did. The LPL Financial study mentioned earlier also found that top advisors were 53% more likely to offer estate planning. Even financial planning professionals report seeing an increased interest from their clients in estate planning. One survey found that 34% of financial planning professionals said clients were asking for estate planning as part of a more comprehensive range of non-investment services.
To exceed client expectations without hiring an in-house estate planning expert, you have several technology partners to choose from for this service. Trust & Will, Estate Guru, Wealth.com, and Vanilla are just a few of the available options.
Like healthcare planning, there are a few life events financial planning professionals can use to bring up estate planning. Getting married and having children are both great opportunities to bring up estate planning. You could also bring up estate planning after your initial meeting with a new client and present it as a basic component of a secure financial plan. Alternatively, tax season can also be a good time to incorporate estate planning since clients are already in “paperwork mode.”
Summary
Based on this data-driven research, advisors need to go beyond basic financial planning to retain and attract high-net-worth clients. Offering a personalized plan based on a client’s goals and behaviors in all areas of their life is a guaranteed way to ensure high-net-worth clients stick with you for years to come. Wirehouses and large firms will likely have an easier time offering a variety of value-added services to clients, so smaller practices need to get creative by utilizing third-party companies like the ones mentioned in this article.
Want to dive deeper into why healthcare planning, in particular, matters for high-net-worth clients? Register for my free webinar on Wednesday, April 24th at 12:30 PM ET.
Although she’s years away from her own retirement, Christine Simone is obsessed with helping current and future retirees plan for and optimize their healthcare costs. She’s held notable leadership positions within the healthcare industry, working with key stakeholders from payers to providers to the Veterans Affairs. Now, Christine is the CEO and co-founder of Caribou (www.caribouwealth.com), a software solution for the finance industry. She’s driven by her passion to slash hidden incentives in healthcare to support smarter financial decision-making, and she is within the fraction of women founders who have raised venture capital. She can be reached at christine@getcaribou.com.
A message from Advisor Perspectives and VettaFi: To learn more about this and other topics, check out our most recent white papers.
Article by Christine Simone, Advisor Perspectives
