One of the best ways to make smart decisions about your wealth is to work with professionals who are able to connect with you and relate to you. You want to surround yourself with experts who know you well enough to really “get” what you want your money to accomplish and why.
In fact, we’ve found over the years that a personal connection between advisors and their clients is as important to financial success as traits such as advisors’ competence and resources.
To get advice that works, it’s incumbent on you to understand your own high-net-worth personality so you can select and work with advisors who are an ideal match.
High-net-worth (HNW) psychology is all about understanding what the affluent want from the professionals they work with, as well as the “how” and “why” behind their attitudes and decisions about their money. Extensive research into HNW psychology has helped identify numerous HNW personality types. That said, most affluent investors fall into one of these five categories:
- The Family Steward. Family Stewards’ chief financial and investment concern is taking good care of their loved ones. Their goals usually center on issues like paying for children’s tuition or passing on wealth to heirs. Family Stewards are often conservative financially, and want financial advisors who make them feel that their goal of caring for family is protected.
- The Independent. This type of affluent investor wants the freedom that financial security ensures—freedom to do what they want, when they want to do it. To them, wealth is a means to a desired end. They want to work with financial advisors who can give advice that will allow them to attain—and maintain—financial freedom and flexibility.
- The Phobic. Phobics don’t like investing, don’t understand it and don’t want to learn. They prefer to delegate investment duties to a financial advisor they trust and who demonstrates reliability and dedication.
- The Mogul. Moguls seek power, influence and control, and they tend to view investing as yet another arena where they can exercise those things.
- The Accumulator. These investors save more than they spend, live below their means and don’t show outward signs of affluence. They may have millions of dollars, but might wear only sale-priced clothes from discount stores. Their goal is capital appreciation, pure and simple. The more money they have, the better and more comfortable they feel.
Note: There’s nothing inherently good or bad about any of the personality types. Each one simply reflects someone’s core beliefs and ideals about money and wealth.
IDENTIFY YOUR HNW PERSONALITY
If you choose to work with an advisor, it’s important to partner with one who shares your particular HNW personality—or who at least knows how to work well with your type. We believe that working with an advisor who doesn’t understand or appreciate your core values could cost you financially.
Example: Say you’re a Mogul type who is seeking outsized returns and willing to take substantial risk to maximize the probability of obtaining your goal. You’ll probably be poorly served and disappointed by an advisor who favors conservative investments. Likewise, if you’re a Phobic and your advisor constantly wants to talk about the gyrations of the markets, you’ll find yourself having an unenjoyable investment experience.
So which HNW profile fits you closest? We tend to see that many people are Family Stewards—they do what they do in order to help give their spouses, children and grandchildren more opportunities in life.
If you’re not sure, write down some answers to these questions:
What would you like your investments to achieve? If you’re a Family Steward, your answers will revolve around what you would like your money to do for your family, ranging from funding the college education of a child or grandchild to taking care of an elderly parent to estate planning that ensures a harmonious division of assets for your children. You’ll want an advisor who focuses in those areas and has an in-depth understanding of families and family dynamics.
If, by contrast, you’re an Independent, your answers will probably include goals like buying your dream house or sailing around the world. In other words, you will place the highest value on using money to buy personal autonomy and freedom to do exactly what you want to do in life—and your advisor will need to understand and account for those drivers when serving you.
When you think about money, what concerns, needs or feelings come to mind? If you write down a phrase like “I want my money to grow as quickly and safely as possible” or “I want to have $5 million by the time I’m 60,” you can be pretty confident you are an Accumulator looking mainly to acquire more assets. That might mean you should seek out an advisor who pursues strong growth over time.
If you associate feelings of power, importance and control with money, you are most likely a Mogul. You see having more money as having more ability to influence people—ranging from family members to business contacts to community leaders—and events to your advantage.
How involved do you like to be in the investing process? If you feel investing is uncomfortable, a burden or even a bit scary, you are probably a classic Phobic—and you’ll probably want an advisor who doesn’t throw a lot of detailed information about investing at you.
Armed with a good idea of your high-net-worth personality type, you can assess whether the advice you are getting today reflects that type. It’s another key step in helping to position yourself to achieve an elite wealth management experience.
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