Keep your wealthy clients

By Melissa Shin | June 19, 2012 | Last updated on December 5, 2023
2 min read

Canada lost approximately 2,000 wealthy clients between 2010 and 2011. So, how do you keep the ones you have?

The Capgemini/RBC World Wealth Report 2012 says many wealth management firms are not flexible enough to meet the needs of clients while staying profitable. So, they must scale up – generate new revenues without increasing resource use.

There are four ways to do this:

  • Automation of processes, such as regulatory filings and reporting
  • Taking a team approach: employ product specialists so advisors are free to focus on wealth management
  • Better segmentation of wealthy clients
  • Don’t acquire other companies without making sure they will help you scale up

Read: How to segment your clients

David Wilson, strategic analysis group manager for Capgemini Financial Services, finds most firms segment clients based on asset levels. “That’s inefficient,” he says.

Gay Mitchell, deputy chair of RBC Wealth Management, adds, “Consider a retiree and an entrepreneur. They could have the same [dollar figure in assets], but each face different challenges.”

Indeed, clients with similar wealth profiles don’t always share other characteristics, such as investment knowledge, risk profiles, succession planning needs, and financial goals.

Once advisors have segmented their clients, they can then look for the right product specialists, and find the right places to automate, since some clients will always prefer a personalized touch.

Help clients help themselves

The World Wealth report also found some wealthy clients prefer handling some of their own investments. Again, proper segmentation will help you find these clients and serve them accordingly.

For such clients, Mitchell recommends they take a portion of their wealth and use a DIY investing portal. Advisors can also help build the relationship by providing research and market insights.

Mitchell also says some firms offer “practice portfolios” within their DIY portals, and she suggests advisors tell wealthy clients’ children to open up such portfolios.

“We use that as a way to prepare the next generation,” she says. “It helps them build confidence and learn to make [investment] choices.”

Read: Wealthy worry about next generation

Add emerging markets and atypical assets to portfolios

Finally, how can advisors ensure wealthy clients still see returns?

“Investors should diversify across as many assets classes and geographies as possible,” says Mitchell. She recommends a tilt toward emerging markets given their GDP growth prospects, while cautioning that this tilt is only appropriate for investors who can stomach the risk. “Asia-Pacific and Latin America have seen good progress.”

Wilson suggests diversifying portfolios with what he calls “investments of passion,” which include sports franchises, art, diamonds and wine.

These investments are less correlated with equities and fixed income. “As long as the client doesn’t need liquidity, they can be anchors for the portfolio. And, they have utility as well.”

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Melissa Shin

Melissa is the editorial director of Advisor.ca and leads Newcom Media Inc.’s group of financial publications. She has been with the team since 2011 and been recognized by PMAC and CFA Society Toronto for her reporting. Reach her at mshin@newcom.ca. You may also call or text 416-847-8038 to provide a confidential tip.