February 23, 2016
Firms Must Define Their Focus and Evolve Services, Structures and Delivery Models
JERSEY CITY, N.J.—Many advisory firms with aspirations of serving high-net-worth (HNW) investors underestimate the breadth of business changes that are required to be successful, according to a new whitepaper released today by Pershing LLC, a BNY Mellon company. The report, What Wealth Wants: Refining Your Firm's Approach to the High-Net-Worth Market, discusses the business areas essential for change and the practices to achieve success with HNW clients, including service offerings, staffing, operations, and pricing.
"HNW clients represent a considerable portion of the advice market," said Katie Swain, director, financial solutions at Pershing. "Serving this segment successfully is not just a matter of identifying prospects and converting them. It requires a substantial evolution and transformation of a firm's approach to service and infrastructure to ensure that HNW clients can be profitably and sufficiently served over the long term."
HNW investors accounted for one-quarter of U.S. investable asset share in 2015 – or nearly $8 trillion. Market share of this wealth tier, which comprises households with investable assets in the $5 million- $25 million range, is expanding rapidly relative to the industry at large.
Traditionally, wirehouses and private banks have served the HNW market. However, more recently, independent advisory firms have been expanding their capabilities and winning a greater share of HNW business, due to their ability to provide individualized service and greater customization.
"HNW clients' expectations for customized solutions are driven by the complex and unique circumstances they experience in their lives," said Gabriel Garcia, director of relationship management at Pershing Advisor Solutions. "One of the commonly demanded services from HNW clients we see is for financing assistance. Their financing needs relate to a shortage of liquidity, not due to a lack of assets. They seek solutions for leveraging existing intangible assets in a way that minimizes interest costs and tax consequences, and advisors need to deliver these services in a seamless way."
Firms succeeding in meeting the needs of HNW clients receive lucrative rewards, according to research cited in the study. The average client size for a HNW advisor serving investors with more than $5 million in AUM is more than 30 times that of an advisor serving clients with less than $1 million in AUM.
In light of the ample and growing market HNW clients represent and the income potential in serving them, providers are varied and competition is intense. To help firms sustain HNW success, the paper discusses the following core business requirements:
To obtain a copy of Pershing's whitepaper, What Wealth Wants: Refining Your Firm's Approach to the High-Net-Worth Market please visit https://www.pershing.com/our-thinking/thought-leadership/what-wealth-wants-refining-your-firms-approach-to-the-high-net-worth-market
About BNY Mellon's Pershing
BNY Mellon’s Pershing and its affiliates provide advisors, broker-dealers, family offices, hedge fund and ’40 Act fund managers, registered investment advisor firms and wealth managers with a broad suite of global financial business solutions. Many of the world’s most sophisticated and successful financial services firms rely on Pershing for clearing and custody, investment and retirement solutions, technology, enterprise data management, trading services, prime brokerage, managed account technology and operations and business consulting. Pershing helps clients improve profitability and drive growth, create capacity and efficiency, attract and retain talent, and manage risk and regulation. With a network of offices worldwide, Pershing provides business-to-business solutions to clients representing more than seven million investor accounts globally. Pershing LLC (member FINRA, NYSE, SIPC) is a BNY Mellon company. Professionally advised managed accounts are offered through its affiliate, Lockwood Advisors, Inc., which is an investment adviser registered in the United States under the Investment Advisers Act of 1940. Additional information is available on pershing.com, or follow us on Twitter @Pershing.
About BNY Mellon
BNY Mellon is a global investments company dedicated to helping its clients manage and service their financial assets throughout the investment lifecycle. Whether providing financial services for institutions, corporations or individual investors, BNY Mellon delivers informed investment and wealth management and investment services in 35 countries. As of June 30, 2020, BNY Mellon had $37.3 trillion in assets under custody and/or administration, and $2.0 trillion in assets under management. BNY Mellon can act as a single point of contact for clients looking to create, trade, hold, manage, service, distribute or restructure investments. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). Additional information is available on www.bnymellon.com. Follow us on Twitter @BNYMellon or visit our newsroom at www.bnymellon.com/newsroom for the latest company news.