Attracting and retaining affluent clients is an age-old problem for financial advisors. According to a recent study by The Consulting Group, solving the problem remains critical to the long-term growth of the financial planning industry.

Complementing its leading research into the attitudes and behaviours of wealthy Canadians, recently interviewed more than 50 financial planners about their ability to attract, serve and retain high net worth clients.

According to Keith Sjogren, leader of the Wealth Management practice at , the planners recognize that it is becoming increasingly difficult to compete without offering individual securities. “They fear that the lack of a securities license could be a blow to the future of the industry,” said Sjogren.

Mutual funds remain the dominant product choice for small investors

’s survey indicated that the largest barrier for planners in serving high net worth clients was an inability to access adequate products, cited by 31% of respondents.

Mutual funds remain the dominant product of choice for financial planners, particularly for small clients: more than 90% of planners rely on mutual funds to serve households with less than $100,000 in personal financial assets. And more than three-quarters of the planners’ total revenue flows from mutual fund products. “The problem for planners,” says Greg Holohan, a consultant at , “is that as wealth increases, investors tend to move away from mutual funds.”

Many planners see wrap programs and other separately managed accounts as a critical element to serving the affluent. In fact, 30% of planners surveyed use third-party separately managed accounts to serve clients who have more than $500,000 in investable assets. Advisors who resist these programs believe that they diminish the role of the advisor and ultimately make it difficult to justify their fees to the client.

Planners struggle to understand the needs of the affluent

With the emergence of new independent brokerage firms and bank branch-based representatives, financial planners are finding themselves under severe competitive pressure in trying to grow their affluent client bases. Planners saw a lack of knowledge regarding the specific needs of the affluent as a major barrier.

“Limited understanding about the preferences and demands of high net worth investors is reducing the effectiveness of their prospecting efforts,” said Sjogren.


The result is that financial planners, with slightly more than 200 clients on average, end up managing relatively small books. Nearly 90% of planners surveyed have less than $35 million in total client assets.

The survey found that nearly 90% of financial planning clients have less than $500,000 in household investable assets – in other words, only a handful of wealthy clients for the average MFDA advisor. According to ’s proprietary Mass Millionaires Report, a study of affluent Canadians, just 10% of millionaires consider a financial planner to be their primary advisor.

Financial planners look to fund companies to support their growth

The planners report that in trying to become more relevant to the affluent, they often struggle to even identify their wealthy clients – receiving limited support from dealers and fund companies with regard to client segmentation.

Most advisors suggest that, where possible, their top clients are accorded a higher level of service, more personal attention and a speedier response to questions. The affluent are also more likely to be ‘entertained’ than retail clients.

’s discussions with financial planners reveal that while differentiated service levels have helped, it has not led to dramatic increases to the affluent client base. Many of the independent planners are looking to the fund companies for increased support.

“For planners, and the fund companies that support them, the challenge is to provide affluent prospects with access to sophisticated products, reliable expertise and unique investing opportunities,” according to Sjogren. “The competitive environment is very intense, and financial planners need all the support they can get.”

The Consulting Group is a boutique strategy consulting firm focused exclusively on the financial services industry in Canada and the United States. To support its Wealth Management Practice, has interviewed and profiled hundreds of wealthy Canadians and the advisors that serve them. research studies are used extensively by the financial services industry as the foundation for strategy development, the determination of business opportunities, the creation of new products and the education of front-line staff.

For more information:

Keith Sjogren
Principal, Wealth Management Practice
The Consulting Group, Inc.
416) 955-9226