Stuart Rutherford, senior analyst at Ledbury Research, the market research agency, explains why the UK’s medical profession represents a rich seam of new clients for the wealth management industry.

Stuart Rutherford, senior analyst at Ledbury Research, the market research agency, explains why the UK’s medical profession represents a rich seam of new clients for the wealth management industry.

Wealth managers searching for a healthy segment of the wealthy population, during this time of volatile asset prices and widespread retrenchments, may do well to call on some doctors. Market tracking by Ledbury Research has identified that GPs and consultants (high-end doctors) are a very attractive client segment for wealth managers to be targeting at the present time.

Numbering in excess of 70,000, high-end doctors are generally paid well in excess of £100,000 ($157,000) per annum excluding benefits and have clear visibility of future earnings and solid job security, thanks to the government’s promise to protect the National Health Service from the public sector cost-cutting. They can also supplement their incomes greatly through additional work, with consultants, for example, adding an average 45 per cent to their NHS income through private work.

Beyond these headline numbers, in-depth interviews with 10 consultants and GPs all with annual income of more than £100,000 and/or investable assets of at least £500,000, revealed a number of other less obvious  factors that underline their attractiveness, detailed in Ledbury’s Doctors Tribe report.

An under-served segment

When it comes to their finances (outside of their NHS pension), we found that they were often heavily invested in property; indeed, this asset category towered over all others. While they may not be natural risk-takers, their conservative choice of assets has a lot to do with their limited investment and financial knowledge, and the fact that they are not well serviced by the financial services industry and certainly not by wealth managers. Yet as professionals, they are very open to advice and mindful of the need to manage their wealth optimally, and this offers real opportunity to providers.

An understanding of the nature and complexities of the NHS pension is certainly something that they value in advisors and which isn’t always in evidence. Those that are happy with their IFAs cite this as one of their top reasons for their satisfaction. Apart from this, they do not demand anything different from professionals in other fields.

“If somebody does understand pensions, has some insight into it, that will basically be attractive to me”, said a chest physician we interviewed.

All of these features make high-end doctors a particularly attractive group of clients, and given their intelligence and sophistication, they are a particularly relevant HNW segment for independent, high-quality wealth management services.

In the Doctors Tribe report, Ledbury gives wealth managers guidance on how best to approach medical professionals and what proposition to offer based on their nature and attitudes, drawing both on the findings of the research and the agency’s own understanding of HNW individuals and the industry.

Sales and servicing principles

On the sales and marketing side, we note that this segment does not respond well to general marketing and advertising, particularly when it comes to the financial services industry. Marketing material must be targeted in form, and as fact-based and dispassionate as possible. All points need to be properly evidenced, and customer satisfaction claims would certainly benefit from research results and even endorsements from doctors who are clients. A mention in the editorial section of a suitable magazine or website may well be more powerful than many pages of expensive advertising.

We also highlight the fact that the number and quality of colleague relationships within this segment make client referrals and recommendations a key avenue for new doctor recruitment. Another lucrative source of doctor referrals is from colleagues within retail banks. While the amount of wealth they hold with any one retail bank may be modest, knowing doctors positions and ages allows one to make a useful estimation of their overall wealth.

On the service side, among other things, we stress that bankers need to recognise the time pressures that doctors are under and be flexible when seeking to talk to them by telephone and face-to-face. They should certainly follow our interviewed doctors’ advice and make use of emails and even texts to correspond with GPs and consultants, and keep them updated on the performance of their portfolios. They should also recognise that they are dealing with intelligent, scientifically-minded individuals, so they will need to explain things fully and provide robust evidence; they should not be patronising or dismissive towards doctors. Any departures of relationship managers need to be carefully managed to ensure clients are transferred seamlessly to a new one, and that they feel valued and well informed throughout. In terms of client entertainment, doctors show an openness to attend interesting social events, particularly if these are in line with their interests.