More work needed to gain high net clients
ONLY one in 10 wealth accumulators between 40 and 50 years of age use a financial planner, while nine out of 10 in this group use an accountant, according to ipac chief executive officer Peeyush Gupta.
Speaking at last week’sResnikWealth Accumulation conference in Melbourne, Gupta says wealth accumulators are less trusting and want an adviser who will recognise their success and take away concerns about the future.
Gupta says the adviser adds value for these clients by offering cash flow planning and getting the right investment structures and strategies to build wealth over time.
“The adviser should also be the voice of reason to avoid wealth destroying impulses such as tax schemes and lifestyle toys. The client should also be given an element of ‘do-it-yourself’ without risking their core wealth,” Gupta says.
He says finding wealth accumulation clients requires a separate business development approach.
“It is not easy running many streams of business development hoping to catch this type of client. Many wealth accumulation clients are small to medium-sized business owners and general insurance brokers deal with them all the time,” he says.
“However, advisers do not work with these brokers, so that makes it difficult to access this sector.”
Once an adviser starts to win some wealth accumulation clients, they should be charging on a fee-for-service basis, Gupta says.
“Some clients prefer an hourly fee for advice and a plan preparation fee. This will pay for your time, but the client may implement the strategy themselves, so price accordingly,” he says.
Gupta says a separate fee should be charged for ongoing advice and it should be explained to the client what they are paying for. This fee could be one per cent of their salary.
“An adviser needs to charge about $1,500 a year for the business to be viable,” he says.
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