As wealthy customers have started to reevaluate their financial situations, financial advisers at PNC Wealth Management have increased and improved their conversations with wealthy clients in an effort to retain and expand relationships.
The unit of PNC Financial Services Group Inc. (PNC) that focuses on individuals with more than $1 million in investable assets is conducting cash flow analyses and examining clients’ financial plans, said Steve Pappaterra, a senior vice president and managing director of wealth planning for PNC Wealth Management.
But, the firm is also looking to have involved conversations to deepen relationships. “Certainly a lot of what we do centers around making sure clients are comfortable with their financial situation,” Pappaterra said. “But by having deeper conversations, we are able to specifically discern a client’s aspirations beyond their financial goals.”
Too often advisers get so caught up in what a portfolio is doing, that they forget to look at the client. Pappaterra used himself as a prime example. In addition to his job at PNC, he is a professional musician in Philadelphia. He said when a financial adviser talks to him about his passions, he is more apt to increase and develop a relationship with that adviser.
“As advisers, we need to try to ask better questions to create a sense of trust and intimacy,” Pappaterra said. “The better advisers aren’t afraid to ask questions that are a bit more intimate. The best advisers aren’t afraid to make their clients uncomfortable”
With this approach, PNC Wealth Management has been able to retain clients despite a difficult economic environment. Its assets under management have remained steady at $104 billion over the past year.
According to a survey conducted by PNC Wealth Management, 42% of wealth individuals said they have felt a negative impact on their family budget, with 34% experiencing a negative effect on their lifestyle.
In the survey, which polled 1,046 Americans with more than $1 million in investable assets, it found that 88% believe it is "more important than ever to live within my means" and 66% said they have "developed a greater appreciation for the non-material wealth in my life." Half of the respondents said they "feel more centered because the recession has given me an opportunity to re-evaluate my priorities."
Forty-two percent of wealthy individuals have cut their spending on non-essential goods, while 29% have provided financial assistance for friends or family who need it, the survey found. Among the ultra-wealthy with $5 million or more in assets, 39% are more likely to have provided financial assistance to friends or family, compared to 26% of those with assets of $500,000 to $1 million.
Pappaterra said PNC Wealth Management, which has 60 wealth planners, has used a team-based approach to help reassure clients that they are on still on track.
“During a difficult economic cycle, it becomes more important to create a bond and reinforce that bond,” Pappaterra said. “You can’t just take out the portfolio and show how they are doing versus a benchmark. We want to move from just being investment advisers to be wealth advisers. We want to always be a position where when clients make a big decision, we are a part of that decision.”
According to a separate survey by Northstar Research Partners, the majority of high-net-worth investors have stuck with their financial advisers despite heavy losses to their portfolio as a result of the financial crisis that has left them “highly distrustful and disillusioned.”
Pappaterra said it is critical for advisers to improve and deepen relationships now before markets improve and customers begin chasing returns. “If, as an adviser, you can help get wealthy clients through a difficult time, when things improve these folks will stay with you.”
As conversations between clients and advisors at PNC Wealth Management increase, Pappaterra is confident that assets and activity will rise from here. “Relationships are deepening and we are retaining and expanding our base of customers,” he said. “We are certainly not in a situation where we are just buckling down and trying to hold on. We are looking for avenues for growth.”