In order to catch the big fish, financial institutions need not worry about recent performance, fees or the size of their organization, because affluent and high-net-worth investors are more concerned with integrity and trust when choosing who to let handle their money.

"The Motivations Behind Money: Attitudes of Mass Affluent and High-Net-Worth Customers of Financial Services Providers," a recent study by Click Communications, should encourage smaller fund complexes that have struggled in the bear market: Performance and size are not the No. 1 concern of wealthy individuals.

"I thought the most important thing was that affluent placed the highest importance on integrity, honesty and trust," said Sheila McCormick, Click's president and chief executive. "That rated higher than money, performance. It's not surprising, given what's going on," she said, referring to the scandals plaguing corporate America. "The playing field has changed. Having integrity is going to be a point of entry in this market."

In the survey, Click defined the affluent as individuals with $500,000 in investable assets and high-net-worth as those with more than $1 million in investable assets. The majority of those surveyed were between the ages of 45 and 64.

Money Talks

The reasons why affluent customers choose financial institutions and change institutions are not the same, the survey showed. While integrity, honesty and trust are the most important factors in luring the wealthy investor to the institution in the first place, servicing them is the key to keeping them there. Service problems were cited as the primary reason a wealthy customer walks.

"The customer service issue is ranked higher than financial performance and high fees and premiums," McCormick said. "They're valuing customer service over financial performance because they know the market will go up and down."

And while the pollsters expected there to be major differences in the answers between the high-net-worth individuals and the relatively less rich affluent, the responses from the two groups were in line with one another. "There really wasn't a difference between the two," McCormick said.

"Financial services folks need to understand these are sophisticated investors. [They] need to understand how to distinguish themselves from the competition. These people are inundated with opportunities," McCormick said. "They get a lot of solicitations. They want to spread their risk, but they do want that personal attention."

Those that don't learn how to treat their customers correctly have a better change of losing them than if they provided poor returns for the investor. The top three reasons for these investors to switch firms all deal with customer service, and have little to do with whether they are making a profit or not. A lack of responsiveness from the institution ranked as the leading reason, with poor customer service coming in second and errors and mistakes finishing third. "Once you get them you really have to service them because they are used to a high level of service," McCormick said.

If an affluent or high net individual likes and trusts an institution, large or small, they will invest with them, she continued. But that the institution should not attempt to get greedy because prosperous investors don't want to put all our assets in one place.

"People want to minimize their risk and will not put all their assets in one institution. If an organization is going to make a dedicated effort to reach this group, they need to realize it's a different approach."

To prove as much, 70% of the people surveyed deal with more than one insurance company, while 70% deal with more than one bank and 37% with more than one brokerage firm.


Other interesting points in the survey included the fact that the well-heeled are not that concerned with the availability of Web-based services. The affluent also said that advertising doesn't affect them at all, from a marketing perspective. Advertising does not make customers feel secure about their financial institutions, either.

Only slightly more than half of the affluent investors in the survey had a direct relationship with an asset manager, with 80% of those that did own a mutual fund and 55% a separate account. And, while affluent investors may seek advice from financial representatives, they are only somewhat likely to act on that advice.

The size of the institution is generally not a factor to these investors, with community programs and online services not being key drivers when selecting financial partners. The degree of resistance seems to be influenced by the institution's core offering.

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