Unfortunately, many financial and legal professionals do a poor job of explaining viable solutions to wealthy prospects and clients. Poor communication is likely a disaster for everyone. The professionals do not get business.
More importantly, the wealthy may be losing out substantially from not taking action to taking the wrong actions. A powerful answer to poor communication is when professionals connect with their wealthy clients profoundly and meaningfully.
An approach embraced by many of the leading legal and financial experts is framing their advice based on the financial personalities of their wealthy clients. The core nature of the advice doesn’t change. For example, the composition of an investment portfolio doesn’t change. Similarly, the required trusts in an estate plan remain the same. Instead, it’s about how to most effectively communicate advice and recommendations.
The financial personality methodology was developed decades ago using well-established research protocols for creating psychographic segments—or personalities—using surveys of thousands of wealthy individuals. Since its development, the methodology has been proven to be exceedingly valuable as a framework enabling professionals to better connect with their wealthy prospects and clients. The following are the nine financial personalities.
- Family Stewards: The aim of investing, wealth planning, and much of what they think about and do is to take care of their family. They have family obligations that always rank very high on what’s really important to them.
- Independents: They strive for the personal freedom that financial and business success makes possible. They also want to have a solid safety net if it becomes necessary or if they want to bail.
- Phobics: They are not financially knowledgeable and usually avoid focusing on such matters. Any technical discussions are a no-no.
- The Anonymous: For them, confidentiality is a—if not the—dominant concern. They eschew social media and anything that involves sharing information outside a small select group.
- Moguls: They are very concerned about how their personal financial actions can translate into personal power. They are very big on keeping score and ascertaining who is winning and who is losing.
- VIPs: They are interested in social recognition and prestige. They view their business and financial successes as a way to achieve high status.
- Accumulators: Their primary and sometimes sole goal is to make more money. They want to do everything possible to grow and protect their personal fortunes.
- Gamblers: They relish their adrenaline rush when they succeed in business and life. They are problem solvers and thoroughly enjoy investing and related activities.
- Innovators: They want to be at the cutting edge of business and finance. They tend to focus on very sophisticated wealth management and family support solutions.
The financial personalities are not only beneficial for professionals working with the wealthy, but they are also helpful in enabling the wealthy to get better results from professionals. Being self-aware and knowing their financial personalities have been shown to help the wealthy better evaluate the wealth managers, lawyers, accountants and other professionals they engage. When the wealthy are not appropriately addressing how they think about their finances, they’re likely not to receive as much value as they otherwise would. The wealthy are more inclined to make mistakes, including missing out on significant opportunities.
To avoid such problems, knowing when the wealthy know their financial personalities, they can readily ascertain if the professionals they’re considering or have hired are in synch. If they’re not, it’s time to find some talented experts who are.
Russ Alan Prince is the executive director of Private Wealth magazine and chief content officer for High-Net-Worth Genius. He consults with family offices, the wealthy, fast-tracking entrepreneurs and select professionals.