What do your HNW clients really need?

Phil Ralli of Aviva platform & pension marketing explains why IFAs should be chasing HNW clients.

I realise that I‘m preaching to the converted when I say that the benefits of seeking financial advice are apparent. Indeed, the majority of Professional Advisers readers would like everyone to have some form of relationship with an adviser. However, we realise this is not necessarily possible so most of us settle for people seeking advice around major financial events such as the birth of a child, retirement or the purchase of a house.

Now generally when we bemoan the fact people are not using financial advice, we are referring to the less affluent. However, new research into the over 660,000 UK tax payers who earn more than £100,000 each year shows that this sector is also not as engaged with the adviser community as we might wish. Indeed, over half (54%) of this group do not have an existing relationship with an IFA.

Some of those who don’t have a relationship may work in financial services and 11% receive advice via a banking package. But what about the rest? Of those who said they did not have an existing relationship with an IFA, 58% felt confident that they could make financial decisions by themselves and 22% felt they did not need regular advice on their finances.

While these people might not necessarily be making the wrong decisions – indeed, many may be making the right decisions – they might not be making the best ones. Indeed, some might be unaware of certain products that could be tailored to their requirements or they could benefit from a more diversified range of solutions.

Arguably some of the biggest financial decisions a person will ever need to make is around their retirement portfolio – be it big or small. This is a concern all UK citizens face but the more affluent have additional concerns that are unlikely to impact someone on the average UK salary.

One of the primary fears for the high earners is the fact they might be penalised for making adequate retirement provision (50%). For them, it seems to be a double edged sword – save too much and risk falling victim to higher tax penailties, or save too little and find yourself stressed and financially underprepared.

Tax solutions

Therefore, tax-efficient retirement solutions can justifiably be considered crucial to a higher earners retirement portfolio but, with the UK tax system bearing comparison to shifting sands, not necessarily something that is ‘DIY’. Other concerns – which they share with the majority of UK consumers – are how they will maintain their standard of living (43%) or seeing the choices open to them restricted due to a lack of finances (39%).

The clear answer to these fears is to find an adviser and – as we highlighted above – some have done just that, but it appears that this lucrative advice sector has significant scope for growth. Indeed, with the Retail Distribution Review (RDR) on the horizon and advisers actively looking for potential new revenue streams, it might seem ideal.

But how does the average IFA go about finding these potential clients and what can advisers offer that will encourage them to choose their firm?