July 20, 2012
Money management is an austere business, especially the high-net-worth brand. High-net-worth – or HNW – managers cater to an identical clientele as luxury conglomerates PPR, Richemont and LVMH, but have failed to emulate those companies and their marketing tactics.
The lessons HNW managers should take from luxury marketing are numerous.
From client interaction to the quarterly statements, HNW finance must learn how to be luxurious. Imitation is not difficult, but it requires a different sort of thinking.
On the money
Luxury branded money management does not exist. If it does, why has not anyone had heard about it? Instead, financial firms are competing based on the most volatile metric conceived—investment performance.
Performance is important. Very important. But branding is much more flexible.
Branding can be altered and tailored to an ever changing clientele. Performance cannot.
Branding creates a different competitive advantage. Branding is an advantage that helps to outweigh the negative implications of the occasional investment performance hiccup.
European luxury brands have spent years building a reputation of exclusivity and product uniqueness.
A personal touch and the customization of the financial product are embedded in the structure of the HNW financial products. But it does not feel customized. It has to be stated proudly and boldly like a “Made in Italy” tag. Not quietly.
Luxury brands excel at creating an aura of uniqueness, and HNW firms should take the time to better understand what they do and how. In essence, it is the luxury branding of money management.
Line of site
Client retention in the money management business is not always simple. It requires a high-touch model with care given to balance between overly attentive and too far out of touch.
HNW managers are faced with the same issues as PPR and Richemont. They must engage their clients and prospects carefully and tactfully. But they must engage – there really is no other choice.
The simplest way to understand one of the striking differences between high-net-worth money managers and luxury retailers is to visit a couple of Web sites.
Visit a luxury retailer and a money manager’s Web site and you are likely to see a striking difference. There are two different sensations and emotions evoked.
The marketing materials of the typical HNW firm do not stand up to the marketing efforts of their luxury counterparts. There is simply no comparison.
Beyond the Web sites and marketing materials, there is the simple to understand yet exceedingly difficult to instill element of confidence.
It is critical that the HNW firm embody not only a feeling of exclusivity and uniqueness, but confidence in the quality of the product. The financial equivalent of “Made in Italy” quality.
Bringing this type of service or product is not easy in finance, especially in the post-Madoff world. Why? Clients tend to frown on auspicious offices and lavish soirees. But they expect luxury-level services. There is a delicate balance of luxury branding and responsibility.
The notion is that austere is the financial firm norm, and HNW firms should challenge it.
HNW FIRMS present themselves poorly to the public.
The image problem is largely a result of not understanding where they fit in the financial ecosystem. Marketing professionals and those in charge of strategy at HNW managers must realize that they are luxury brands.
Exclusivity and elegance should be at the heart of the branding of the next-generation HNW firm. It is the luxurious financial firm that understands its clients and their expectations.
Samuel E. Rines is analyst and economist at Chilton Capital Management, Houston, TX. Reach him at ser@ccmgp.com.
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