Many fortunate advisors have reached the stage in their careers where they are not looking to take on many new clients. Rather, their goal is to selectively add just a few—notably, high-net-worth (HNW) ones. This makes sense on many levels, given that there is only so much time an advisor can spend with clients in the day. If you can make $2,500 an hour versus $250 an hour, which would you prefer?
But evolving a practice to attract decamillionaires is different than running a successful wealth management firm, which is what most advisors have now. If you’re looking to work with fewer, more profitable clients and build out your HNW clientele, here are three things to consider.
Value proposition
More than likely, you’ve developed a strong value proposition that has served you and your wealth management clients well. You’re comfortable saying it, and it attracts good clients to your firm. But does the same value proposition work for a much higher-net-worth client, say in the $10 million–$20 million range? Offering comprehensive wealth management, a holistic approach, and excellent client service are important and may get the conversation started, but they may not be enough to persuade the truly affluent.
Instead, focus on the true value you and your firm offer. Do you have access to the attorneys and tax experts that you need? We recently had an advisor bring on an ultra-HNW business owner client after a two-year process that saw the advisor introducing business evaluation experts for the sale of the business; arranging financing conversations for the new buyer; suggesting mortgage experts for the purchase of a new vacation home; recommending attorneys to set up trusts for the children and grandchildren; using specialized investments for tax mitigation, and proposing a family fund for philanthropy. If you’re not sure of your ability to guide a HNW client through every aspect of their business,you’ll want to be sure that your network of experts can.
And if you’ve obtained an advanced designation relevant to HNW investors (e.g., a Certified Private Wealth Advisor or Chartered Financial Analyst designation, a master’s degree in taxation, a law degree), then, by all means, use it. Just be sure you are connecting your advanced expertise to some of the unique needs of HNW prospects so that they understand why and how they benefit from working with you. Remember before you pursue any designation, please consult your firm’s compliance policies prior to moving forward.
Planning considerations
There’s an enormous difference in the financial and estate planning process needed to go from a $500,000 client to a $50 million client. How would you approach the planning necessary to start supporting such a client? Advanced planning departments are often the first place to start for these conversations, offering specialized expertise including estate tax minimization techniques, philanthropic planning and execution, managing concentrated stock or equity compensation awards, preparing a business for sale, and tax mitigation strategies during life.
Many firm partners offer private client services, and it’s worth having a conversation with that team to learn how they can help you before you connect with a valuable prospect. Some firms will offer stand-alone resources and direct you as needed. Ideally, a firm will assign a relationship manager to work with you on your HNW prospect and guide you through the process, so you understand all the resources available and don’t miss important details. The time frame to cultivate a HNW client can be much longer, and it calls for careful attention throughout the process.
Charitable giving vehicles
Many decamillionaires have surplus funds they wish to give to philanthropic causes. You will want to join in those conversations, and actively guide them. What’s the best way for clients to donate and do good, with the least amount of taxes or disruption to a portfolio? Learn all you can about qualified charitable distributions (QCDs), donor-advised funds (DAFs), charitable remainder trusts (CRTs), and charitable lead trusts (CLTs), so you understand how each one works and when they would be most beneficial for your clients to employ.
If you’d like to attract more HNW clients to your practice, start thinking carefully about some of the unique planning needs and concerns of this group, and make sure you have access to the expertise you’ll need. By helping to solve the needs of HNW clients, you’ll create a strong value proposition and position your practice for future growth.
Kristine McManus serves as chief advisor growth officer at Commonwealth Financial Network.
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