The demographics of wealthy clients are changing, and advisors need to adapt if they're to attract and retain their business, Kathleen Burns Kingsbury of KBK Wealth Connection explained at an Investment Management Consultants Association (IMCA) event in Toronto.
When most people think of a wealthy person, the image of a white businessman in his mid-to-late 60s usually comes to mind, she said. While historically accurate, it's becoming less so at a rapid pace.
People are becoming rich younger. "They now tend to be in their 50s when the liquidity event that vaults them into this group happens."
They're also more ethnically and racially diverse: the percentage of non-whites has risen from 10% to 22% in the last decade, according to Kingsbury.
And far more women have joined the ranks, many through business ownership.
"The combined wealth of women business owners in the United States would put them in fifth spot in world GDP rankings," she says.
Putting the spotlight on women, she notes how underserved they are by the financial advisory community. This is a mistake for a number of reasons.
First, women stand to inherit 70% of intergenerational wealth transfers. The figure is so high because women live longer on average, and they're double inheritors. "Not only do we get our spouses' money, we also get our parents' money," Kingsbury explains.
Second, women make 85% of household buying decisions, and this includes decisions on financial services and wealth management.
The third reason: "Seventy percent of women fire the couple's advisor within one year of the death of her spouse," according to Kingsbury.
What's behind this? It comes back to the second reason.
Have you ever held a meeting with a couple and thought you completely aced it, only to get a call from the husband a day later explaining they won't be taking you on?
"His wife wielded her veto power and you got fired—before you were hired—on the car ride home," says Kingsbury.
She notes there's a subconscious tendency to cater almost exclusively to the male during these meetings. But she's quick to add it's not just men who fall into this trap.
"Women advisors are just as liable to make this mistake," she says.
So, if women don't fire their advisors while their husbands are alive, there's a good chance they'll drop the hatchet when they're gone – unless you've recalibrated your approach to see her as an equal partner.
And more and more women are becoming primary breadwinners. "Forty percent of women have taken on this role," according to Kingsbury.
Read: Women now breadwinners
So advisors need to become attuned to the interests, concerns and needs of a more varied client base, or they risk alienating the new face of the most-sought-after segment of the market.
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