Working on the premise that most advisory firms operate on fee-based models, it’s not surprising that so many target high-net-worth individuals and those in the ultra-high-net-worth camp. It’s simple math. The more assets the firm has under management, the larger its top line should be.
Likewise, high-net-worth clients represent efficiency. It’s more appealing to have an individual or married couple bring $5 million to the table right off the bat than it is to attempt to gain $5 million from, say, 50 prospects with $100,000 apiece. Of course, advisors also know that getting well-heeled prospects to become clients is easier said than done.
Converting any prospect to client requires some strategy, but when it comes to the most affluent individuals, it’s a different ballgame. While many of those in $1 million-plus camp don’t work in the financial services field, it’s reasonable to assume they are educated, sophisticated in intellectual terms and conversant if not fluent in myriad financial matters. Thus, their demands and expectations of advisors are likely to be different than those of other prospects.
For advisors, the good news is that the strategies most applicable to working with high-net-worth prospects aren’t difficult to implement as highlighted in the details below.
Think Holistically
As it pertains to the advisory business, “holistic” is a word frequently used, perhaps overused, but it’s highly relevant when working with high-net-worth individuals. They likely want multiple services, including estate planning and taxes, under one roof.
“HNWI clients generally look to work with financial professionals who can provide comprehensive management of their entire financial picture,” notes Nationwide. “This can include what you’d typically expect like investment management, estate planning, tax planning, but also tangible non-financial assets, operating businesses assets, human capital and liquid financial assets.”
Another interesting point about wealthy prospects is that they’re willing to pay up for convenience and high-quality services, meaning these potential clients are less apt to be wooed by low fees and place greater emphasis quality.
“Tailoring your services to each client’s unique financial situation can make you a top choice for those needing financial guidance,” adds Nationwide. “A holistic approach means integrating various aspects of their financial life into a coherent plan that aligns with their long-term goals—and this of course can apply to all kinds of clients.”
Variables Matter, Too
Undoubtedly, high-net-worth clients want premium advice and services, they also want “softer” variables such as communication, consistency, education and trust.
Along with adding value and ensuring discretion, communication and consistency are vital in terms of retaining wealthy cleints.
“HNWI clients, like many clients, typically value trust above all, concludes Nationwide. “Cultivating a reputation as a trustworthy and knowledgeable expert in the finance industry can help you stand out. Make sure your credentials are visible and consider contributing thought leadership content to well-respected financial publications, social media sites, or speaking at industry conferences.”
Related: How Advisors Can Improve Communication With Clients