Differentiation is called key to wealth managers’ success

ORLANDO, Fla. — Wealth management companies need to stand out from the crowd as the business becomes more commoditized, attendees were warned here last week at the American Bankers Association’s annual Wealth Management and Trust Conference.
“There’s never been a better time than now to do proactive marketing strategies,” Charles “Chip” Roame, managing principal of Tiburon (Calif.) Strategic Advisors LLC told the Washington-based ABA’s gathering of wealth managers. “You need to distinguish yourself.”
Mr. Roame urged the audience to focus on target marketing and segmentation. Identifying and pursuing a targeted audience, such as doctors or airline pilots, would lead to more referrals, a higher close rate and lower cost to serve clients, he said.
“You have to keep doing it,” Mr. Roame said. “It may take years, but you will be seen as the experts in that space.”
Wealth management companies also need to align their marketing with key trends in the lives of affluent clients, according to Madelyn Hochstein, president of DYG Inc., a market research firm in Danbury, Conn.
For example, she said in her presentation, “Breaking the Mold — Differentiating Yourself in a Commoditized Market,” affluent Americans increasingly want to add meaning to their lives by having an effect on others and the future.
Wealth managers, Ms. Hochstein said, should align their brand with values and with elements that affluent people consider part of a “valuable life,” such as philanthropic organizations or a noteworthy legacy.
With more people getting richer, people want to “truly stand out,” she said, as exemplified by the boom in newly built large homes, or “McMansions.”
People with household incomes of more than $150,000 view themselves as extremely ethical, responsible and hardworking, and want to keep up on the latest technologies, current events, cultural shifts, and health and wellness issues, Ms. Hochstein said.
A ‘winner’s circle’
To capitalize on that, she suggested, wealth managers need to present themselves to the affluent as possessing similar characteristics — characteristics that will make affluent clients feel as though they are part of “a different, more exclusive winner’s circle.”
As an example of appealing to this desire for exclusivity, Ms. Hochstein cited the tag line of a watch company targeting wealthy customers: “Very famous, among very few people.”
She also contended that affluent Americans want to simplify their lives and are looking for a trustworthy “navigator” — one who can steer them to relevant choices when they need to make a decision.
Examples, Ms. Hochstein said, include search engines such as Google, celebrity “gurus” who are up on the latest trends, and the “collective wisdom” of others, such as Netflix movie ratings from other customers.
As a result, she said, “successful wealth management is now inexorably linked to successful navigation to the institution and across and within products and services.”
If the brand doesn’t stand strongly for a point of view, “then it doesn’t have what the affluent need,” Ms. Hochstein said.
Wealth managers also need to recognize the increasing economic power of women, she said.
By 2010, Ms. Hochstein said, women will receive 59% of bachelor’s degrees and 60% of master’s degrees conferred in the United States.
“Educated, sophisticated, empowered women will increasingly be the client,” she told the audience. “You need to get out in front of this wave.”
Conference co-chairman John Kosik, group senior vice president of wealth management at Rosemont, Ill.-based ColeTaylor Bank, said he found Ms. Hochstein’s “navigator” image particularly useful.
“We used to think of ourselves as the quarterback for the client, making all the decisions,” he said, “but I think the navigator role is more relevant now.”
Charles Paikert can be reached at
[email protected].

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