Reaching High-Net-Worth Investors Means Funneling the Right Resources

March 9, 2021 — Boston

Engaging the HNW market will require asset managers to shift distribution models and adopt technology

In light of COVID-19, high-net-worth (HNW) providers are relying on asset management partners more heavily for strategic solutions and capital markets guidance. However, since the pandemic, advisors and home offices have had an even tighter circle of asset managers with which they do business. Firms looking to grow their business need to understand that every engagement with a HNW practice is critical and requires distribution efforts to be more intentional and strategic, according to the latest Cerulli Edge—U.S. Asset and Wealth Management Edition.

According to surveyed HNW practices, access to portfolio managers/product specialists (57%), economic/market commentary (46%), and portfolio construction tools (44%) rank among the most valuable resources that asset managers provide. Firms that effectively serve HNW channels should continue to gain momentum, as advisors are proactively approaching asset managers for capital markets insights, innovative products, and portfolio construction support.

Many asset managers have shifted their distribution models, moving away from a channel-specific model to a channel-agnostic approach. Instead of structuring sales teams solely on location and firm, sales coverage has become a function of how practices are uniquely structured and their level of investment complexity. The pandemic has further accelerated this team-based approach. “Sales teams do not always need to be an expert on every strategy the firm offers, but they should be able to bring all the pieces together by navigating the firm to bring in the right person or specialist when necessary,” says Asher Cheses, senior analyst. Ultimately, the right distribution strategy will depend on a range of factors, but the most critical aspect for asset managers is to ensure they bring the right resources to the right advisor or firm.

The pandemic has also prompted changes to coverage models, which have become more dependent on technology and virtual engagements. Moving forward, firms need to invest the proper time and resources because the virtual model will likely have a lasting impact on the way business is conducted for asset managers. While it is yet to be determined how distribution models will evolve post-pandemic, Cerulli believes that more firms will implement virtual engagement on a wider scale to increase efficiencies. “Personal engagement and technology can be a powerful combination for distribution teams to enhance efficiency and build scale, although success truly comes down to providing access, differentiated product, and intellectual capital when working with these key HNW relationships,” he concludes.

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Note to editors

These findings and more are from The Cerulli Edge—U.S. Asset and Wealth Management Edition, March 2021 Issue.

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