Millionaire clients are less likely to invest more with current firm, report reveals

Clients are less loyal than ever, so how can you boost your share of wallet?

The financial services industry has never been so competitive and even as the population grows wealthier, it’s becoming harder for wealth advisors and firms to grow their share of wallet.

Among high-net-worth clients, it may be even tougher, according to a new report from industry research specialists Hearts & Wallets that reveals that just 32% of millionaire clients plan to invest more with their current primary or secondary firms.

Nationally across all income bands, high likelihood to invest with their current firm fell three percentage points.

The research also shows that 64% of consumers already have at least two saving and investing relationships, up from 35% a decade ago, and the number increases the wealthier they are: the average U.S. household has 2.5 relationships but the average $1 million-plus household has 3.6 relationships.

Beth Krettecos, the report’s co-author, said that millionaire clients could be considering increasing investments with third and fourth tier firms they have relationships with.

“They could also be considering real estate or alternative assets. Firms competing in the wealth market should keep an eye on reluctance among millionaire households to invest more at their current primary firms,” she said.

GAINING SHARE OF WALLET

What can firms do to boost their share of wallet in an increasingly competitive market?

The report suggests that first, firms ensure they are the main source of retirement advice. Those that are have two-thirds or more of the percentage of share of wallet, compared to 30% to 40% share of wallet for those that are not.

Secondly, delivering both service and advice is key.

“Getting a customer covered by an experience that delivers both service and advice is more important than the category the experience competes in,” said Laura Varas, Hearts & Wallets CEO and founder. “Firms who wish to grow assets by increasing the share of wallet their customers entrust to them should analyze their customer experiences to improve business results.”

GETTING MORE MILLIONAIRES

The research found that Fidelity is the No. 1 firm for millionaires, serving 38% of America’s millionaire households, and has 17% overall share of assets for $1 million-plus households.

Charles Schwab/TD Ameritrade, Vanguard, Bank of America Merrill, Morgan Stanley/ETrade, and JPMorgan Chase are among other leaders for these wealthy clients.

High-trust relationships are very important for higher-asset clients, who rate 55% of their relationships as high trust versus only 43% of relationships for customers with under $100,000.