Best Practices Emerge for Serving High-Net-Worth Clients
An analysis of strategies for serving high-net-worth individuals reveals a shift towards aligning with client values beyond the transaction. Key tactics include proactive support, anticipating needs before they are voiced, and building long-term relationships by acknowledging personal and professional milestones. Discretion and establishing trust are cited as paramount for retaining the loyalty of affluent clientele.
- The global population of high-net-worth individuals (HNWIs) grew by 5.1% to 22.8 million in 2023, with their total wealth expanding by 4.7% to $86.8 trillion, marking a return to growth for this segment. North America saw the most significant rebound, with its HNWI population and wealth increasing by 7.1% and 7.2%, respectively. - A massive intergenerational wealth transfer is in progress, with an estimated $84 trillion to $90 trillion expected to be passed down from baby boomers to younger generations in the U.S. over the next two decades. This shift is projected to make millennials the richest generation in history. - Younger high-net-worth clients, particularly millennials and Gen Z, demonstrate a strong preference for investments that align with their values, especially in areas of sustainability and social justice. Nearly half (47%) of HNWIs under 40 state that sustainability influences their investment choices. - While older generations often focused on wealth accumulation, Gen Z tends to view wealth as a means to achieve time, freedom, and flexibility. They are also more inclined than Boomers to have specific stipulations in their wealth transfer plans regarding how the money can be used. - Technology plays a crucial role in serving affluent clients, who expect seamless, personalized digital experiences similar to those offered by major tech and retail companies. Digital tools are often the preferred method of engagement for one in four high-net-worth clients. - Ultra-high-net-worth individuals (UHNWIs) are diversifying their relationships, with the average number of wealth management firms they work with increasing from three in 2020 to seven in 2023. This suggests a growing demand for specialized and value-added services that a single firm may not provide. - Hyper-personalization, which uses real-time data and analytics, is becoming the new standard for delivering relevant advice and anticipating client needs before they are expressed. This strategy moves beyond broad categorizations like age and asset level to focus on individual goals and behaviors. - There is a rising interest in alternative investments among younger, wealthy investors who believe it's difficult to achieve above-average returns solely from traditional stocks and bonds. As a result, two out of three HNWIs plan to increase their investments in private equity in 2024.
