What Wealthy Investors Really Want by Steve Moeller A wise man once said, "you can get anything you want if you just help enough other people get what they want". Having what people want is the primary goal of marketing. The primary goal of traditional selling is trying to get people to want what you have. The key distinction is that selling is product-driven and marketing is client-driven. If you want to harness the market forces instead of fighting them, you'll study prospects more than products. Then you can offer them exactly what they want--and they'll beat a path to your door. By understanding the emotional needs of a group and then designing a product to fit those needs you will achieve the ultimate marketers' goal: market resonance Do You Know What Your Clients Want? Most advisors don't have a clue what investors really want. Ask a typical investment advisor what clients want, they'll say: performance. Your best clients aren't motivated by products,they are motivated by the emotional states or "pay-offs" that your products and services can provide them. For most individuals having to manage a large pool of capital is a major headache. Research shows that the vast majority of people who have a lot of money are more concerned about keeping it than they are about maximizing their performance. For them managing money is a stressful and burdensome task - not a pleasure. Since most investment advisors haven't studied the psychology of their clients, they try to sell what they personally want, performance. A typical stockbroker in a major wirehouse today is 29 years old, extremely aggressive and doesn't have a very high net worth. The average American millionaire is a 57-year-old business owner or professional. He is very conservative, family-oriented male who has spent many long, hard years acquiring his wealth. This is a complete cultural mismatch. The broker is selling products and performance - the clients wants a long-term relationship, security and preservation of capital. Don't Sell Performance If you don't understand what your clients want you'll typically sell them performance. And that will turn off 90% of the best prospects and attract a fee-based advisors' worst nightmare: performance-oriented investors who don't care about your relationship and expect you to consistently beat the market. Fortunately, most clients are, at their core, not performance oriented. Emotional wants and needs of these investors is the key to building a profitable and secure asset management business. To effectively market and sell to wealthy clients you need to understand their mental processes. Find out three things:1) their primary product or service interest, 2) their main reason for wanting that product or service, 3) their expected emotional payoff. Look at it this way: Product-Benefit-Emotional State. You can often attract them with a product or benefit but what they really want is a positive feeling or emotional state. What Wealthy Investors Really Want While individual investors have different emotional payoffs, most of them are attracted by specific products and services. Portfolio management. The wealthier an individual is, the more complex and time-consuming his or her money management process is. Most investors don't know the best way to build portfolios. If they have any understanding at all, it relates to buying individual stocks, bonds or mutual funds. They have no clue when it comes to asset allocation and modern portfolio theory. Advisors assume their clients have a much higher level of understanding then they really have. One of the most attractive services you can communicate to wealthy investors is asset allocation and portfolio management. The emotional payoffs they seek from these services are reducing their stress, the feeling of financial security and the comfort of knowing that a professional taking the responsibility of managing it all for them. Tax Planning. Nobody likes paying taxes. And the wealthier you are, typically the more taxes you have to pay. The benefits they seek are tax reduction and more income or net worth. The deep emotional need is a feeling of fairness. Financial Planning. The benefits they want are clearly defined goals and a blueprint for achieving them. The emotional payoff they want is a feeling of control over their financial destiny and a sense of purpose in their lives. Estate planning. Because wealthy prospects are generally long-term thinkers, estate planning--particularly as they become older--is a very powerful draw for attracting wealthy clients. Often in the estate-planning arena, leaving money to the children is not as high of a priority as leaving a legacy for the grandchildren or endowing a worthy cause. Simplifying things for their heirs and taking care of their responsibilities are the benefits. The emotional payoffs are a feeling of control, love for their family and if they give to a worthy cause, the feeling that their life has had significance and meaning. Increase their net worth. A pretty safe assumption is that money is very important to anyone who has it - and they want your help getting more. The benefit is they are winning the money game and the emotional payoff is feeling that they are increasing their financial security and that they made the right decision working with you. Plan for a secure retirement. Most advisors think their clients are afraid of running out of money when they retire. This is only partially true. In America, if you run out of money, you won't starve. You'll simply lose your financial independence. A huge fear of wealthy Americans is becoming dependent either on their children or on the state. The benefit is a financally secure retirement. The payoff is the emotional comfort of knowing that they can maintain their financial independence. Provide Investments that Fight inflation. Most wealthy Americans come from three categories: professionals, key executives and small business owners. Almost all of them have benefited significantly from inflation. And they've seen its devastating effects. They want to make sure that your strategies and recommendations will protect them from inflation. The benefit is to maintain their buying power and their payoff is the feeling of financial security and maintaining their financial independence. Simplify everything. The more money you have, the more complex it is to manage it. The simpler you can make your recommendations, your strategies and your reports for you investors, the more value they'll perceive. So, don't focus on economics alone. Your clients seek simplicity, their benefits are saving time and reducing paperwork. The emotional payoffs are feeling in control and reducing the stress from complexity andinformation overload. Educate Your Clients to Avoid Mistakes. They look to you to help them avoid. If you can educate your clients to become prudent long-term investors, you're doing them a huge service and you'll be helping them achieve two of their primary benefits: avoiding mistakes and losing money. The pay-offs are feeling in control, and eliminating frustration and anxiety from buying high and selling low. Add Value - That Your Clients' Want The criteria that investors valued the most are all tied to emotional feelings about the manager. Most clients don't leave their investment advisors because of poor performance. They leave because of poor service, lack of attentiveness and the feeling that the advisor doesn't really understand what's important to them. What wealthy investors really want is a long-term relationship with an expert, trustworthy financial advisor who understands their goals, empathizes with their problems and helps them get what they want. Recognize Your Clients' Highest Value In your marketing communications and in your verbal communication with your clients, focus on the benefits and payoffs that I've covered in this column. Tell them you can design a portfolio that'll meet their risk tolerance, their time horizon and their specific investment goals. You can help them minimize their taxes and help increase their net worth. Explain that your strategies won't necessarily beat the market--but they'll help them achieve (or maintain) financial independence when they retire. And tell them you'll help them fight inflation and leave a legacy for their children, grandchildren and their pet causes. Make sure they understand how your strategies will help them simplify their lives so they can focus on the fun things their money can buy them. Copyright © 2000 by Steve Moeller, Tustin, CA. All rights reserved. Steve Moeller is one of North America's foremost experts on marketing financial services to the wealthy. Over the last decade, Steve has studied and researched the best strategies for building a super profitable financial services business. He is a highly sought-after financial services industry speaker and management consultant. He is the author of "Effort-Less Marketing"and other learning tools and coaching programs. To find out more about his coaching programs, learning tools or to find out how to hire Steve to speak at your meetings, call 800-678-1701 or e-mail bizviz@businessvisions.com. 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