Cerulli to FAs: Establish Relationships with Prospects Before They’re Wealthy

By Alex Padalka November 20, 2020

Financial advisors may need to starting building relationships with potential clients before those clients are actually wealthy, according to a recent report.

Research firm Cerulli says it found that 22% of investor respondents in a recent survey expect to boost their reliance on their advisor by as much as 40% for investors in their 40s and by around 9% for those in their 70s.

The respondents reported similar patterns on expected reliance on automated online investment services, Cerulli says.

The research firm notes that investors under 40 had “elevated interest” that also grew among respondents in their 40s — but that it declined “rapidly” among older respondents.

“These results underscore the importance of establishing advice relationships with investors in their 40s, in many cases before substantial wealth accumulation,” Scott Smith, director of advice relationships at Cerulli, says in a statement. “Prospective clients in this segment are desperate for help in sorting out their competing financial priorities but draw little interest from traditional advisors unless they accumulate substantial assets.”

Cerulli’s survey also suggests that wealth management firms may be in for a revamp in the wake of Covid-19. For example, the embrace of mobile banking during the pandemic may result in the addition of cash management to a wealth management practice’s core services, Smith says in the statement.

Other areas wealth management firms may want to consider are contact-free credit cards, in which 40% of the survey’s respondents expressed interest, and cash rewards credit cards, which garnered interest among 29% of respondents, Cerulli says.

“By rounding out their product and service offerings, either internally or through partnerships, providers can better serve their clients and limit attrition by clients seeking more comprehensive platforms,” Smith says.

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