The high net worth market is set to become fiercely competitive in the next few years, and advisors will need to tweak their service offerings to continue to attract clients from this market, according to Keith Sjögren, director of research and advisory services consulting at Investor Economics Inc.

Speaking at the Portfolio Management Association of Canada’s annual general meeting and conference in Toronto on Wednesday, Sjögren said there is growing competition for a limited level of assets in Canada’s individual private client space.

“We’ve got an increasing number of firms chasing a relatively static number of dollars in that specific section,” he said.

He estimates that there are 12,700 advisors targeting high net worth clients in Canada. Approximately 66,000 high net worth clients will be seeking a new financial advisor this year, according to Sjögren, leaving each advisor with just 5.2 prospective new clients in 2010.

Because the volume of new high net worth clients is so limited, he said advisors will need to become more aggressive in attracting clients from other advisors in order to continue growing their assets under management. Relying on referrals will not be sufficient for advisors to grow their businesses, Sjögren said.

“If we’re going to reach our goals,” he said, “we’ve got to take business away from each other.”

However, assuming that there is reasonable market growth and economic growth in the next few years, Sjögren said the number of high net worth households will grow considerably in the next few years. By 2018, Investor Economics estimates that there will be approximately 900,000 households with at least $1 million in investible assets.

“This is a growth market,” he said. “The opportunity is fairly significant.”

Advisors must keep in mind that a massive intergenerational transfer of wealth is set to change the high net worth landscape in Canada, according to Sjögren. He believes that as much as $650 billion in assets will be transferred to younger generations between 2009 and 2018.

In order to retain these assets, Sjögren said advisors must begin working with clients’ entire families. “We’ve got to deal with family relationships, not individual relationships,” he said.

He encourages advisors to reach out to the heirs of this wealth to offer guidance on managing their looming inheritance.

Advisors should also keep close tabs on the changing needs of clients in order to continue to provide services that are relevant. Sjögren noted that many clients’ priorities have shifted from asset accumulation to wealth preservation.

“The average age of the millionaire household is rising,” he said. “The demands of those households are changing.”

He noted that many clients are increasingly eager for tax planning and estate planning advice as part of their financial planning efforts.

Advisors should be prepared to spend more time with clients in order to keep them happy, Sjögren added. Investor Economics’ research shows that client meetings are becoming longer, on average, as clients are spending more time questioning the decisions their advisor makes.

“It’s a more challenging dialogue to have,” he said.

One strategy that’s likely to be effective in the increasingly competitive market is to focus on a specific niche of clients, such as entrepreneurs or specific types of professionals.

“If you become an expert in a particular area, you’re likely to be very attractive,” Sjögren said.

IE