Shift in Wealth Concentration Changing the Future of the Client-Financial Advisor Relationship

As the last members of the Baby Boomer generation turn 50 this year, financial advisors need to prepare for attracting and serving a new wave of wealthy clients whose goals and backgrounds are dramatically different from previous generations. According to the annual State of the Affluent 2014 industry intelligence report released today, an entrepreneurial spirit and business ownership are two key traits for extreme wealth creation in the coming years.

The report was produced by CEG Worldwide, a research and coaching firm for financial advisors, and developed in partnership with WealthEngine, a leader in wealth intelligence and marketing services.

There is a clear connection between business ownership and an individual’s ability to attain a level of wealth that makes him or her part of the affluent, super affluent and ultra-affluent communities – defined in the report as investable assets between $1 million and $5 million, $5 million and $25 million and $25 million and over, respectively.

According to the report, 33% of affluent, 74.5% of super affluent and nearly 90% of ultra-affluent individuals own a business.

Commenting on this trend, John Bowen, CEO and founder of CEG Worldwide, said: “This report demonstrates that entrepreneurs are the next generation of the ultra-high-net-worth community, a fact that is greatly changing the way that financial advisors serve their affluent, super affluent and ultra-affluent clients. Entrepreneurs have different needs, personalities and desires from their Baby Boomer counterparts. We are seeing a shift in the advisor community toward adopting a client-centric model that goes beyond just offering traditional investment management services, and more toward providing a complete wealth management experience.”

However, not all business ownership is creating wealth equally. Revealed in the report’s research is a dramatic difference in the level of wealth depending on the business’ average annual revenue. Specifically, the report says that the average annual revenue of a business owned by an affluent individual is just over $750,000; whereas a business owned by a super affluent individual has average annual business revenues of over $22 million, compared with over $370 million in average annual revenues for businesses owned by an ultra-affluent individual.

The translation of equity into individual wealth is also lopsided for the ultra-wealthy. According to the report, a business with $750,000 in annual revenue creates approximately $138,000 median equity for an affluent person, whereas a business with $22 million in annual average business revenue creates $5.7 million in median equity for a super affluent individual, compared with a business of $370 million in average annual revenues creating $49 million in median equity for an ultra-wealthy business owner.

“Our data highlights the growing trend that wealth is created through business ownership and entrepreneurship, and less and less through traditional salary, pension or social security wages,” explained James Dean, Senior Vice President at WealthEngine “This is important because it changes the ways in which financial advisors communicate with prospective clients, especially as unhappy individuals seek financial advisors who place a premium on long-term relationships. This trend presents an opportunity for advisors to capture a growing segment of the market,” noted Dean.

For more information or to receive the full report, please contact James Dean at: jdean@wealthengine.com.

Media Contacts: 
John Bowen
CEG Worldwide
john.bowen@cegworldwide.com
+1.866.560.8820

Mitchell Schwenz / Claire Shutt
Peppercomm for WealthEngine
wealthengine@peppercomm.com
+1.212.931.6156 / +1.212.931.6148

About CEG Worldwide 
CEG Worldwide is the #1 coaching organization for the financial services industry. We coach financial advisors to achieve breakthrough results in their careers by substantially increasing assets under management, accelerating affluent client acquisition and growing personal net income—all while serving their clients well. We deliver insights garnered from empirical research on industry best practices and coach financial advisors to implement these practices in their businesses. The result: focused, energized and enriched financial advisors who build substantial economic value in their practices, deliver a world-class experience to their clients and ensure a high quality of life for themselves. 

CEG Worldwide also works collaboratively with leaders of financial institutions to grow new net assets under management and the loyalty of their top financial advisors while attracting new top financial advisors. We provide insights, developed from empirical research, into what motivates top financial advisors, how to help them stay fully engaged and how to accelerate the achievement of their professional goals. Our services secure the long-term success and allegiance of top financial advisors who generate significant income for financial institutions.

For more information, visit www.cegworldwide.com.

About WealthEngine 
WealthEngine™, Inc. is a leading provider of wealth intelligence and marketing services to nonprofit, luxury goods, retail, and financial organizations. The company’s unique data-driven approach to analytics, prospecting, and marketing has delivered actionable strategies and measurable results to more than four thousand clients. Headquartered in Bethesda, MD, WealthEngine serves both the United States and the United Kingdom. For more information, visit www.wealthengine.com.

Call us at 877.927.8071 to find out more.

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