A unique audience: how to meet the needs of high net worth individuals
At the end of the day, marketing success always comes down to knowing your customers and how to meet their needs. But that becomes a challenge when each member of a target audience has their own very exacting requirements. Welcome to the world of the high net worth individual.
What separates this market from the mainstream is not that it might be more insulated from economic shocks. High net worth individuals are just as vulnerable to rising interest rates as the rest of us.
The difference, according to Peter Izard, Head of Intermediary Business Development with Investec, is their entrepreneurial mindset.
Seizing the opportunity no matter the economic weather
“Yes, high net worth individuals see an uncertain economic climate like everyone else, but they are often slightly more risk taking and are very entrepreneurial and opportunistic.
“And in a market like we’re seeing at the moment, there are always opportunities. With that comes the ability to make decisions that others may not have the ability or inclination to make,” he explained.
So how does that approach manifest itself in practice? And what have the current high interest rates done to a typical high net worth individual’s debt strategy?
According to Peter, in the previous era of low rates there was lots of borrowing for investment, but in the past year, there has been a rise in redemptions with high levels of debt paydown.
Nevertheless, there are pockets of investment happening thanks to high net worth individuals’ appetite for opportunity. For example, purchases of undervalued or distressed assets.
This entrepreneurial spirit, Peter argues, is why these members of the economy are seen as active wealth creators.
“It’s their ability to move at pace and use debt to continue the creation journey,” he says, adding: “Whether you need to invest in business or a private individual that needs funding, the ability to move quickly is absolutely essential, because missed opportunities can be very costly.”
Three pillars of a successful high net worth proposition
As with any market, once its needs are understood it becomes possible to develop a compelling proposition.
While high net worth individuals are supremely unique, they do tend to share a common characteristic: that is, a lack of time. Consequently, they also understand the value of time, which is why professional service providers such as lawyers, accountants and financial advisors play an important role in managing their affairs.
Service then is a critical pillar of any high net worth proposition. But there are two other vital pillars, one of which is flexibility. Off-the-shelf products tend not to work – this market expects services to be designed around its needs and those delivering them to be personally available at any time of the day. The final pillar is price.
Peter explained: “My clients are very clear about what they want, where they’re going in their business and personal lives. They have a plan and that’s why they are willing to pay for it and value it.
“It might seem like we all want the lowest common denominator on price, but high net worth individuals are willing to pay slightly more because they understand the value of personalised service and flexibility.”
Customer engagement is a key part of the service pillar
Part of the service pillar is about regular engagement based on audience knowledge. For Peter this means spotting relevant opportunities and presenting them to clients in a timely manner.
“Engagement is our number one mantra, and at a time of economic upheaval, it is even more essential. Talking to your clients, whether they be on the corporate side or the private side, and understanding their issues and actually trying to serve them wherever you can, is absolutely paramount.
“What high net worth clients need is that engagement that enables them to turn around and say, ‘look, this is where I am at the moment, but this is my horizon and things can change very, very quickly’.
“So, it’s about being proactive, having that ongoing relationship and reaching out to them regularly – it comes back to service and flexibility.”
Peter’s advice here illustrates the importance of engaging all audiences in difficult economic times. While it might be tempting to reduce engagement to cut costs, his explanation shows: A) how opportunities could easily be missed, and B) that continual engagement strengthens new and existing relationships, preparing the ground for accelerated wealth creation when favourable economic conditions return.
The case for boosting marketing in a downturn is made in this blog.
What next for the high net worth market?
There’s always a reason to delay financial decision making – whether that’s a crisis such as the Ukraine conflict, or uncertainty caused by an impending general election.
But when it comes to serving high net worth individuals, as far as Peter is concerned, the key is embracing their desire to navigate through challenging times and seek out opportunities.
And while he believes the jury is out on whether the Bank of England’s recent interest rate pause represents an economic turning point, he’s confident that no matter what happens next this unique market’s entrepreneurial mindset will remain as sharp as ever.