The four C’s for attracting affluent customers
The four C’s for attracting affluent customers are Connection, Creativity, Client Advocacy, and Client Experience. High net worth clients now look for who offers the best digital self-serve capabilities, but they also want a highly personalized relationship with a trusted advisor. That means understanding what sets a given firm apart from others and makes it right for them. Attracting and retaining wealthy clients will get even more challenging in the coming years.
As trillions of dollars transfer between generations in the coming decades, competition for high net worth clients will intensify. Firms that can attract and retain affluent millennials and Gen Xers now will gain an edge. The four C’s – Connection, Creativity, Client Advocacy, and Client Experience – provide a framework for appealing to this demographic.
Digital self-service capabilities are a must, as tech-savvy clients demand user-friendly apps and platforms. However, a personalized touch will always still matter.
Affluent clients want to feel understood and build relationships with advisors who truly advocate for their needs. Firms should showcase their uniqueness and why they are the best fit. With so many competitors, it’s vital to communicate the value you offer through content and messaging that resonates.
Here are a few common questions about the Great Wealth Transfer:
How much wealth will actually be transferred? Estimates range from over $70 trillion to $80 trillion that will pass between generations. Long term estimates keep rising with the value of the stock market.
When will the Great Wealth Transfer occur? It’s already underway and expected to peak between 2031 and 2045.
Who will inherit the transferred wealth? Gen X and millennials stand to be the primary beneficiaries to inherit trillions of dollars. The youngest Millennial was born in 1996, and the cohort ranges from people born between 1981-1996. That means the oldest are in their early 40’s. And it is important to note that Gen X is currently inheriting wealth from Baby Boomers and shouldn’t be ignored.
How will family dynamics be affected? Disagreements over unequal inheritances, confusion over estate plans, conflicts over caregiving, and confusion over wealth management are family issues likely to arise. Financial advisors predict inheritance disputes will increase as wealth transfers occur.
Are heirs prepared to handle the wealth? According to various surveys, the majority of heirs feel unprepared to manage large inheritances. This suggests a need for more financial education and advisory services to ensure inheritances are properly managed. There may be an increased need to focus on certain topics including taxes (particularly capital gains tax), life insurance, trusts, real estate, and portfolio diversification. With family members living longer, there is an opportunity to engage future generations, including children and grandchildren, in a lifelong discussion about building and managing wealth.