Wealth advisors are in the luxury business whether they realize it or not. They just happen to sell investment services to the luxury market. Advisors should look at how luxury brands deliver, service and market themselves and adapt some of these strategies to their work. The very survival of many wealth management businesses depends on transforming wealth advisory into advice on how to live a better life with wealth and leveraging luxury and lifestyle brands as a modern complement to the traditional wealth advisory offering.
Let me explain. The wealth industry in Canada exceeds five trillion dollars (which is a big number) and from my perspective, the chase that's been going on has been at the high end of the wealth market. All the assets are concentrated in a very small number of households, with only five per cent of the households controlling more than 75 percent of wealth assets. That means there are only about 803,000 households in Canada that have more than a million dollars in financial wealth, not including real estate and private business ownership. There are 135,000 registered advisors chasing this wealth –which contributes to an overcrowded and confusing marketplace, especially for investors. One of the best ways to differentiate yourself is by becoming a conduit for clients to live a better life with unique access to their most favored luxury and lifestyle brands.
I feel very strongly about this for several reasons. The wealth management industry is often out of touch with people's experiences. Investing and saving is not just about getting rich for most people, it's about making money to live your best life. The second reason is because having wealth and being wealthy is a deeply complex and emotional thing that goes beyond investments. If we were talking 10 or 15 years ago, we and our clients would be focused almost exclusively on portfolio performance, but investment management as a service is increasingly commoditized thanks to technology and the proliferation of low-cost ETFs. So while investments and performance remain a big part of the conversation today, advisors need to consider offering more, becoming a conduit for people’s other life aspirations and one of the best ways to do that is to nurture the relationship between their clients and their unique lifestyle needs.
Wealth is simultaneously the biggest opportunity and challenge. The wealthier a person gets, the more choices they face and the decisions become even more complex. They are also a lot more aware and knowledgeable thanks to greater access to information, but it’s not necessarily curated properly. This is where the next generation of wealth advice is going and I have seen advisors first-hand who are adapting to that change. They have become more like a psychologist and life coach, developing that deeper relationship between themselves and the client.