The Successful Advisor of the Future: Insights into the ... · Net Worth and Ultra High Net Worth...

The Successful Advisor of the Future: Insights into the Preferences of the Wealthy Investor

Nuveen Investments Wealth Management Services ©2015 Nuveen Investments, Inc.

2 For Advisor Use Only. Not For Public Distribution.

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Characteristics of Affluent Clients

Affluent Clients’ Advisor Preferences

What to Do Now – Strategy Roadmap

— Communicate Your Value

— Client Discovery

— Client Advisory Boards

— Broaden Your Services



Perceptions of Wealth

Source: 2013 Affluent Market Insights, Spectrem Group.

Definition of Rich: “Any income that is at least one hundred dollars more a year than the income of one’s brother-in-law.” – Writer H.L. Mencken

$1 Million* According to those with $100K-$500K

$5 Million* According to those with

$5 million or more

*Investible Assets


<$100K 87,340K HHs

4%

>$100K-$500K 21,992K HHs

15%

>500K-$2m 9,920K HHs

27%

>2m-$5m 2,285K HHs

20%

>$5m-$10m 742K HHs

14%

>$10m-$20m 239K HHs

9%

>$20m 94K HHs

11%


Percentage of Total Investible Assets by Wealth Level

Source: Cerulli Associates, High-Net-Worth and Ultra-High-Net-Worth Markets, 2014.

KEY Wealth Level # of Households % of Total Investible Assets



Households and Percentage Growth by Year and Asset Level

Source: Spectrem Group, Affluent Market Insights, 2015; Net worth is exclusive of primary residence.

Household Assets 2007 2008 2011 2014

Millionaires $1 to $5 million Growth from previous year:

9.2 1.9%

6.7 -27%

8.6 2%

10.1 5%

High Net Worth $5 to $25 million Growth from previous year:

1.2 2.6%

0.8 -28%

1.1 2%

1.3 5.6%

Number of households in millions



Occupation or Former Occupation

Source: Spectrem Group, Affluent Market Insights, 2015; Millionaire - $1 million to $5 million in investible assets. High net worth - $5 million or more in investible assets.. Net worth is exclusive of primary residence.

High Net Worth

Professional – 23%

Corporate executive – 17%

Manager – 14%

Business owner – 9%

Educator – 8%

Millionaire

Manager – 18%

Professional – 14%

Educator – 14%

Corporate executive – 4%

Consultant – 4%



28% 15%

58% 61%

14% 24%

2005 2014

Risk Appetite is Increasing

Millionaire

2015 Affluent Market Insights, Spectrem Group. Millionaire - $1 million to $5 million in investible assets. High net worth - $5 million or more in investible assets.. Net worth is exclusive of primary residence.

27% 12%

57%

57%

16% 31%

2005 2014

High Net Worth

Aggressive

Moderate

Conservative



Next Generation of Investors

Millennials take nothing at face value

Millennials are conservative and cautious

Millennials want to be in control

Millennial heirs want to realize their own ambitions

Source: “Think you know the Next Gen investor? Think again.” UBS 2014. “Millennials” are defined as people ages 21-36.; “Millenials and Money” Merryl Lynch Private Banking and Investment Group 2013.

How Millennials approach finances



Next Generation of Investors

17%

36%

11%

12%

24%

Outperforming the market

Tracking market performance

Underperforming, but protecting againstloss

Earning a small guaranteed rate of return

Meeting goals, regardless of marketperformance

How Millennials judge investment success

Source: “Think you know the Next Gen investor? Think again.” UBS 2014. “Millennials” are defined as people ages 21-36.


Advisor Preferences of Affluent Clients

2%

4%

3%

7%

11%

11%

14%

34%

4%

4%

4%

8%

9%

10%

17%

35%

Banker

Accountant

Mutual Fund Co. Rep

Discount/Online Broker

RIA

Investment Manager

Independent Financial Planner

Full Service Broker

Millionaire High Net Worth

Type of Primary Advisor

Source: 2014 Affluent Market Insights, Spectrem Group. Millionaire - $1 million to $5 million in investible assets. High net worth - $5 million or more in investible assets.. Net worth is exclusive of primary residence..



Millionaire and High Net Worth Use of Financial Providers

Source: Cerulli Associates, High Net Worth and Ultra High Net Worth Markets 2014..

24.4%

31.5%

15.8%

24.3%

2010 2014

% of Households with Wallet Share 90% or Greater

Millionaire ($2m-$5m) High Net Worth (>$5m)

3.6

Average Number of Provider Relationships, 2014

3.2



Reasons to Change Advisors

5%

11%

28%

25%

60%

60%

50%

63%

11%

12%

30%

27%

54%

58%

55%

67%

I can think of no reason to fire an advisor

Losses over the past year

Losses over the past two years

Losses over the past five years

Not providing good ideas and advice

Not being proactive in contacting me

Not returning emails in a timely manner

Not returning phone calls in a timely manner

HNW Millionaire

Source: Specrem Affluent Market Insights 2014. Spectrem Group. Millionaire - $1 million to $5 million in investible assets. High net worth - $5 million or more in investible assets.. Net worth is exclusive of primary residence.



Service, 24%

Trust, 18%

Relationship, 16% Investment

performance, 15%

No particular reason, 14%

Convenience, 8%

Pricing, 5% Products, 3%

Reason for Satisfaction with Primary Provider

High Net Worth and Ultra High Net Worth Markets 2014, Cerulli, December 2014. High net worth is defined at more than $5 million in investible assets.


42% 31%

34% 36%

24% 33%

Millionaire HNW


Investor Expectations of Response Time

38% 29%

29% 34%

33% 37%

Millionaires HNW

2 Hours Or less

3-12 Hours

Next Day Or longer

Phone Calls Emails

Source: What Do Millionaires Seek From Advisors?, Spectrem’s Millionaire Corner, www.millionairecorner.com. March 8, 2011.


What to do Now: Strategy Roadmap

Objective Solution Enhance your market presence Communicate Your Value

Better understand client’s personal objectives

Client Discovery

Better understand client’s service preferences

Client Advisory Boards

Expand your capabilities Broaden Your Services


Communicate Your Value

Strategy

Positioning

Execution

A strong brand is a great prospecting tool

What: Strategy — What is your current value proposition and

what do you want it to be? Who: Positioning

— Define target market segments — What message do you want to

communicate to each of those segments? How: Execution

— Plan content and/or messaging — How you will communicate (i.e. frequency,

mediums and process)

Personal Branding Components



Six Different Types of Marketing Messages Analogy: I’m like an old fashioned internist. I monitor your financial health and well being. When there is a problem, I either treat it myself, or bring in an expert from my team who can. Team Approach: I’m a partner in a wealth management practice that helps select families in the Bay area define their legacy. Question & Answer Technique: Have you ever seen a seemingly successful business suddenly close its doors? Well, we help small business owners avoid the mistakes that can cause this to happen. Problem Solver: I’m fortunate to work with a small but select group of families, helping them handle the unique challenges of financial success and privilege. We help our clients prioritize, organize and simplify their financial matters, take care of the people they love and support the causes that are most important to them. Straight Shooter: My advisory practice is focused on helping wealthy families create and distribute their wealth efficiently. Offbeat: Watching the stock market is a little like watching a child playing with a yo-yo while riding up an escalator. The yo-yo goes up and down, while the escalator slowly rises. I help my clients watch the escalator, not the yo-yo.



1.Practice Philosophy (Value Proposition)

2.Team Bios

3.Array of Services and Commitment to Communication

4.Client Scenarios

5.Firm Description

Keep it Short and Sweet -Your Pitchbook should be 8 to 10 pages in length. Within 10 to 15 minutes you should be able to deliver an effective overview of your practice

Creating an Effective Pitchbook Structure



“Historically, there has been a substantial gap between the performance of individual investors and institutions. My job is to help you close that gap.”

“Investing is an emotional process. An informed and objective partner can help us manage those emotions, leading to better investment decisions.”

“I believe that investors who rely on professional advice have a greater probability of success than those who don’t.”

“In my experience, the cost of professional advice is much lower than the cost of getting it wrong.”

“An experienced advisor can not only identify the right course of action, but also help us avoid potential obstacles or landmines that aren’t immediately obvious.”

The Role of the Financial Advisor


Client Discovery

Builds rapport

Increases trust

Puts client at ease

Establishes credibility

Differentiates advisor

Benefits of a Powerful Client Discovery Process

Previews client experience

May decrease potential for arbitration/litigation

Identifies true goals, dreams, needs, wants,

issues, concerns, attitudes, motivations…


Client Discovery

1. Capture financial data needed to provide client recommendations

2. Surface issues:

— Asset allocation

— Capital needs

— Concentration issues

— Tax considerations

— Lack of coordination

3. Get to know clients beyond facts/figures

4. Demonstrate your professionalism

Goals of Highly Effective Interview


Client Discovery

What are current areas of your life, personal and professional, that you would like to maintain? What are your biggest priorities regarding family and financial management? Regarding your holdings, what are you most pleased about and what are your greatest concerns? What opportunities would you like for you and your family to be able to take advantage of now and possibly

over the next 3 years? What charities do you and your family support? Do you support them with time or financial resources? For this relationship to be a good experience for you, what three things would have to happen?

Sample Questions



Strengthen client relationships

Establish competitive differentiation

Gain competitive intelligence

Receive strategic feedback

Develop new ideas

Benefits of Client Advisory Boards

Benefits to Advisor Peer networking

Gain better understanding of advisor’s practice & services

Opportunity to provide feedback

Can directly impact advisor’s business in a positive way

Enjoys improvements made to service model

Benefits to Clients



Keys to Success

Strong follow-up process

— Thank you letter

— Summary of meeting notes

Evaluate feedback, implement best ideas

Focus on refining business strategy to exceed clients’ expectations

Measure the impact – The Three “R’s”

Reward members for participation

Compliance considerations

— Operate within firm guidelines

— Solicit management support


Broaden Your Services

Tax Planning

Family Governance

Risk Management

Legacy Planning

Charitable Solutions

Retirement Advice

Liability Management

Investment Guidance

Neither Nuveen Investments Wealth Management Services nor its employees offer tax or legal advice. Clients should consult with their professional advisors before making any tax or investment decisions.

Integrated Wealth Management



Philanthropy

— Appropriate for children of all ages; youth, young adult and adult

— Opportunity for learning plus a discussion about “neutral” money

— Discussion of passion for causes, charitable intentions, gauging impact and frameworks for giving (family foundations, donor advised funds)

Family Meetings, Family Projects, Family Businesses, Family Transfer Structures

— Meetings: family mission statements, family web sites

— Projects: vacation home, addition to primary home

— Businesses: planning, valuation

— Transfer Structures: family limited partnerships, trusts

Family Wealth Education Family Activities



Of the high net worth households consulting others regarding philanthropic guidance:

—92% initiated interest to financial advisor

—Only 8% of charitable giving discussions were initiated by the advisor

Philanthropic planning is a key element to differentiate advisors and achieve deeper relationships

Advisors must address charitable issues to be truly competitive in the retention and addition of A-level clients

Frameworks for Giving

Source: Bank of America Merrill Lynch 2010 Study of High Net Worth Philanthropy: Issues Driving Charitable Activities among Affluent Households, November 2010; The Philanthropy Roundtable.


Review


Affluent Clients’ Advisor Preferences

What to Do Now


THIS PRESENTATION IS PROVIDED FOR INFORMATIONAL AND EDUCATIONAL PURPOSES ONLY. THE STATEMENTS CONTAINED HEREIN ARE BASED UPON THE OPINIONS OF NUVEEN INVESTMENTS WEALTH MANAGEMENT SERVICES. ALL OPINIONS AND VIEWS CONSTITUTE OUR JUDGMENTS AS OF THE DATE OF WRITING AND ARE SUBJECT TO CHANGE AT ANY TIME WITHOUT NOTICE. HYPOTHETICAL EXAMPLES ARE SHOWN FOR ILLUSTRATIVE AND EDUCATIONAL PURPOSES ONLY. THIS INFORMATION CONTAINS NO INVESTMENT RECOMMENDATIONS AND SHOULD NOT BE CONSTRUED AS SPECIFIC TAX, LEGAL, FINANCIAL PLANNING OR INVESTMENT ADVICE. CERTAIN INFORMATION WAS OBTAINED FROM THIRD PARTY SOURCES, WHICH WE BELIEVE TO BE RELIABLE BUT NOT GUARANTEED.

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The Successful Advisor of the Future: Insights into the Preferences of the Wealthy Investor

Nuveen Investments Wealth Management Services ©2015 Nuveen Investments, Inc.

The Successful Advisor of the Future: Insights into the ... · Net Worth and Ultra High Net Worth...

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