The growing gap in wealth between different parts of the UK population has received much media attention in recent years. But despite the doom-and-gloom that pervades much of the coverage around the economy, the fact is that there are still a number of high-net worth individuals in the UK who make very attractive targets for businesses looking to provide them with investment and money management products.
Firstly, let’s consider the shape and size of the wealth market in the UK today:
- The UK wealth market is actually set to grow in two ways; the individuals that are already of high-net worth are likely to see their assets grow, while the group itself is also set to increase in size
- In late 2011, a Datamonitor report investigated the number of people in the UK who could be described as “Mass Affluent or High Net Worth”, based on the value of their liquid assets. It found that the UK wealth market can be valued at approximately £1.6 trillion, a staggeringly large amount of money
- Recent forecasts put the total UK savings and investment market at approximately £2.2 trillion. Therefore, this means that the UK wealth market accounts for more than 70 per cent of the total market
- This does not mean a great deal until you realise that the wealth market, defined as someone having more than £25k liquid assets, accounts for just 20 per cent of the UK population
- Finally it’s also worth noting that this wealth group is forecast to grow by the same Datamonitor report by 100,000 people a year and £87billion a year until 2015
Clearly, wealthy customers are still out there. However, the thorny issue of the Retail Distribution Review (an attempt to regulate Independent Financial Advisors) is soon to come in to effect and no one is precisely sure how this will affect customers paying for advice. When this is combined with the issue of accurately targeting and approaching wealth customers, and the acknowledged difficulty of enticing them to swap providers in a volatile market, the wealth market can seem to be overrun with potential pitfalls.
To overcome these obstacles, obtaining and assessing high-quality customer data is a must. Wealth related businesses should look to create a “single wealth view” – much like a single customer view, but incorporating financial details. By doing this, businesses can see the size of the market, understand who these wealth customers are internally and externally, how much they are worth, where they are, who will self-invest and seek advice as well as which customers have the highest propensity to buy specific wealth products.
So who are these elusive people with hidden (or flaunted) wealth? They can be simply broken down into two distinct groups: those that are still employed and those that have retired.
Those still at work have some key characteristics that marketers should be aware of before planning outreach. These people are likely to lead very busy lives with many commitments and little time to read marketing materials. They are also likely to be used to a very high level of service in all their dealings with brands, featuring personalised correspondence and trusted contacts.
Communicating quickly and efficiently with these individuals therefore becomes imperative to any successful marketing activity. Marketers must ensure that they are bending over backwards to provide a second-to-none level of service, offering this consumer group points of contact from telephone calls to in-person visits to offices or private homes.
Another factor, particularly when marketing investment services, is the issue of trust. Many of these high-net worth individuals have built long term relationships with advisors that they rely upon to guide their finances. Dislodging these individuals has always been a difficulty for those working in the investment sector, a problem that has been exacerbated in recent years given the financial crisis.
The above points are largely true for retirees as well, but a key differentiator is the increased time that this group has available to invest in shopping around for a product that really suits their needs. In addition, this group is likely to be interested in a different set of financial products – instead of the pension provision and investment related products that are more likely to appeal to those in work, retirees are likely to be more interested in risk-averse products such as ISAs.
This information should lead to a single learning for marketers: you have one chance to approach high-net worth individuals – they will not respond well to a repeated, blanket approach. Any campaign should be considered and precisely targeted to increase the chance of success.
Ensuring the correct approach is where data can unlock a mine of useful information which can make the difference between success and failure. Many of these individuals can appear to be largely the same on the surface, with similar lifestyles and all the appropriate trappings of wealth and luxury. The detail that matters to companies is crucial however – what funds do these individuals have? Can they invest £25,000? Or is that loose change to them?
Getting around this issue requires at least three levels of data:
- First, the assessment that this individual is wealthy enough to target in the first place;
- Second, prioritising the individual based on the amount that they would be able to invest, and ensuring that this level is appropriate for the product;
- Third, the business must select the product that this consumer is most likely to desire
Clearly, marketers in this line of work have much to consider, and much to gain from success. One should think of this much like a penalty in a football match: a calm, considered approach assessing all possibilities is far more likely to result in an excellent finish.
