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Financial Planning > UHNW Client Services

Wealthy Investors Want More Complex Services: Cerulli

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Investable assets held by high-net-worth households in the United States have surged by more than $23 trillion since 2011, and advisory firms have rapidly grown their service offerings aimed at this demographic, Cerulli Associates reported Tuesday.

Services now outweigh personal relationship factors when it comes to bringing new clients on board. Thirty-five percent of high-net-worth individuals in Cerulli’s study said they had begun a relationship with their primary advisory provider because of either the services or the client experience on offer, compared with 28% who said this in 2017. 

In addition, since 2017, every category of service offering has become more commonplace to meet enhanced client expectations and needs, according to Cerulli data.

High-net-worth practices have significantly grown their investment service offerings in the past six years, including 78% that have increased alternative manager search and selection and 32% that internally managed hedge funds or funds of funds.

Cerulli recommends that as clients clamor for alternatives, asset management and technology providers explore how they can use their existing capabilities to enter this market. They can provide greater access to education, improve diligence or analytics capabilities or offer a fund with differentiated price, performance or exposure traits.

Among planning services, Cerulli found that all high-net-worth practices now offer financial planning as a primary or secondary service. In 2023, as clients prepared for wealth transfers and transitions, the fastest-growing services areas were estate planning, offered by 70% of firms in the study, up from 56% in 2017, and tax planning, offered by 45% of firms, up from 29%.

To deliver the best possible client outcomes, firms are looking to third parties to better leverage technology to improve efficiency and to find best-in-class practitioners in estate, tax and other planning areas.

“Complex planning services will continue to build the bedrock of client success in the wealth management industry,” Cerulli senior analyst Chayce Horton said in a statement. “Technology can help firms drive effective client outcomes and strengthen firms’ competitive positioning.” 

Increasing Competition

Some 80% of high-net-worth practices in the study said they plan to expand service offerings over the next five years, while only 18% said they would make no changes. Seven in 10 practices said streamlining operational inefficiencies and enhancing advisor-supporting tools were their top tech initiatives last year, pointing to a focus from wealth executives to enhance advisor productivity, Cerulli noted.

According to Cerulli’s research, the chief factor influencing long-term growth of assets under management for these practices is an increase in referrals from existing clients. This means that leveraging personal networks is as critical as ever, it said.

Cerulli said it expects that demand by wealthy and ultra-wealthy clients for heightened levels of service from their intermediary partners will continue well into the future. 

“It is increasingly important for technology providers, asset managers, and other specialist partners and platforms to aid HNW-focused intermediaries in addressing these growing needs for their clients, and the challenges posed in delivering more services while maintaining the highest levels of quality and profitability,” Horton said.


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