High-net-worth (HNW) investors are valuing their advisor’s service offerings over personal relationships, finds a new study by Cerulli Associates.
According to the study, “The Cerulli Report – U.S. High-Net-Worth and Ultra-High-Net-Worth Markets 2023,” 35% of high-net-worth clients say they began a relationship with their primary advisor due to the services they offered, or because of their experience working with them.
Furthermore, since 2017, Cerulli data finds that “every category of service offering has become more commonplace to meet enhanced client expectations and needs.”
Specifically, clients are showing interest in investment service offerings from high-net-worth practices, including alternative manager search and selection (78%), and internally managed hedge funds or funds of funds (32%). As demand in these fields rise, Cerulli suggests asset managers to offer “greater access to education, improved diligence or analytics capabilities, or simply a fund with differentiated price, performance, or exposure characteristics,” to take advantage of the growth.
In terms of planning services, Cerulli found that all high-net-worth practices now offer financial planning as a primary or secondary service. Other fast-growing practices include estate planning (70%) and tax planning (45%).
To provide additional comprehensive services, high-net-worth firms are scoping out third-party organizations who offer practitioners with expertise in estate, tax, and other complex planning areas. “Complex planning services will continue to build the bedrock of client success in the wealth management industry. Technology can help firms drive effective client outcomes and strengthen firms’ competitive positioning,” says Chayce Horton, senior analyst.
The Boston-based researchers anticipates seeing further growth in the high-net-worth space, as more 401(k) advisory practices explore wealth management offerings.
“From increasingly nuanced investment management services to more comprehensive and specialized planning services, every arena of high-end private wealth services will experience greater demand,” says Horton. “It is increasingly important for technology providers, asset managers, and other specialist partners and platforms to aid HNW-focused intermediaries in addressing these growing needs for their clients, and the challenges posed in delivering more services while maintaining the highest levels of quality and profitability.”
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