Forget relationships, complex services are top of mind for HNW clients

Lisa Kirchenbauer of Omega Wealth Management and Aaron White of Adero Partners

Advisors say estate planning and tax planning are key areas of interest for such clients.

The wealth industry may very well be one where it’s good to be a people person. However, several advisors say that when it comes to ultra-high-net-worth clients and their financial goals, they’re looking for more from their advisors than just typical investment or financial planning services.

A study released by Cerulli Tuesday found that service offerings, mainly delivered through third-party providers, now outweigh factors related to personal relationships when it comes to attracting new clients to advisors’ firms.

“Among planning services, all HNW practices now offer financial planning as a primary or secondary service,” according to the US High-Net-Worth and Ultra-High-Net-Worth Markets 2023 report. “Estate planning (70%) and tax planning (45%) have been two of the fastest-growing service areas as advisors prepare their clients for impending wealth transfers and transitions.”

Aaron White, chief growth officer at Adero Partners, said estate planning is likely ranked the highest because it’s a service area that’s currently underserved by the market.

“Our clients have no idea what’s in their 60-page estate plan,” White said. “They don’t understand it, they can’t visualize it, so the service that we’re rolling out to visualize estate planning, Wealth.com, is going to be a major enhancement, and really allow for more deep conversations with our clients.”

Lisa Kirchenbauer, founding partner and senior advisor at Omega Wealth Management, said along with estate and tax planning coordination, risk management strategies are also lacking. “This is exactly what we are trying to provide especially to these less liquid families or former ‘validators’ – clients who just went to an advisor to validate what they are doing but now need more assistance,” she said.

Kirchenbauer said the challenge is that if an advisor’s fee model is strictly based on assets under management, it may be hard to justify providing the services given the fees, depending on what the HNW family will let the advisor manage. Her firm charges an annual wealth management fee so it can provide all the true value-added support these families need, regardless of what assets they have to manage.

One of the key reasons why HNW and UHNW clients are keeping complex services at the top of mind, rather than focusing on developing a personal relationship with their advisor, White said, is because they’re compressed for time.

“Most of the folks we work with are in their prime earning years and they’re really trying to be as efficient as possible with their time; they don’t have as much time to go and sit and have a long lunch with their advisor and develop more of a personal relationship,” he said.

White added that a lot of his clients will meet with him via Zoom and do an efficient review of the various tax investment and planning opportunities they’re considering, which they then can execute together.

“They’re just looking for those results and to help us leverage their time better,” he said.

The Cerulli report also shows notable growth in investment service offerings by HNW practices over the past six years, with alternative manager search and selection (78%) and internally managed hedge funds or funds of funds (32%) among those growing the quickest.

While some firms may be looking to third parties to better leverage technology to improve efficiency, Ryan Halliday, managing partner of Crewe Advisors, an RIA with more than $1.6B in AUM, said his firm made the decision to expand its staff to be able to provide most of the services internally.

“What we are employing, though, is technology,” Halliday said. “Technology continues to improve and allows us to better manage the process on behalf of the client. We’ve chosen to grow by people instead of exclusively partner with outsourced firms.”

Even though HNW clients want a focus on complex services rather than sitting down and getting to know their advisor, Kirchenbauer says, the two go hand in hand.

“I don’t know how you provide the right services if you don’t have the right relationship. Because of the life planning and financial transition work that we do with clients, it is a more personal business. They don’t want a cookie-cutter, off-the-shelf solution; they want something that reflects their goals, their needs, how they think about things and their values,” she said.