On the Hunt for HNW Clients? Look to In-House Investment Banks

What You Need to Know

A lack of product access has been cited as a critical source of attrition.
Access to internal resources and products can give advisors greater trust in the solutions they recommend.
Smaller independent wealth management firms can focus on providing access to capital to mid-market businesses,

Wirehouse advisors know that going independent allows them to earn more money and often provide their clients with a more comprehensive range of services and products. However, a common refrain among these advisors is that elite clients will not stay with them without ready access to banking solutions.

Yet, it seems that many high-net-worth individuals are considering making this move anyway. 

A recent PwC survey found that 46% of HNW investors plan to change wealth management providers or add new wealth management relationships in the next 12 to 24 months. That’s in addition to the 39% of respondents who said they had already switched or established an additional relationship.

While there are many reasons that affluent clients switch advisors, a lack of product access has been cited as a critical source of attrition, with over 27% of clients who have made a change in the past three years saying that they did so because their new advisor offered access to different products and services.

Affiliating with an independent firm that offers in-house investment banking capabilities can be a true differentiator for financial advisors looking to attract and retain high-net-worth, ultra-high-net-worth and business-owner clients.

For wirehouse advisors considering independence or independent advisors looking to expand their offerings with more sophisticated solutions for affluent and business-owner clients, partnering with a wealth management firm with investment banking capabilities could make a significant difference.

Increased Solutions for Affluent Clients

Many firms have alternative investment options on their product shelf, yet due to the complexity of the products and critical regulatory requirements, they are often limited in scope and can be similar to what other firms offer. By affiliating with a wealth management firm with an established investment banking arm, independent advisors can expand the investment solutions they offer wealthy clients who want more than cookie-cutter portfolio options.

Advisors at firms without capital markets capabilities aren’t able to offer proprietary deal opportunities to clients. They need to look elsewhere for initial public offerings, secondaries, public market equity and debt transactions. A firm with an investment banking arm can create such products and then meet the demand from internal advisors because the firm controls the book.

Access to internal resources and products can also give advisors greater trust in the solutions they recommend for client portfolios. Their firm will know the deal inside and out, and advisors can speak with members of the team responsible for putting the offering together. That is not possible when dealing with large institutions.