High net-worth (HNW) clients represent an attractive segment for advisors who have the experience and expertise to meet their needs.
Unlike average clients, who are focused on wealth accumulation, HNW clients are more concerned about wealth preservation and on ensuring that their wealth is passed on to their beneficiaries and future generations.
“You have to really understand their needs,” says James Porter, partner and executive vice president with Cidel Financial Group in Toronto. “Your reputation often precedes you when striving to attract high net-worth clients.”
Here are some ways to attract HNW clients:
> Referrals
Referrals from existing clients are usually the main source of HNW clients, says Porter. Your ability to gain referrals is a natural product of your reputation and your ability to meet and exceed the expectations of your existing clients.
The second source of HNW clients, Porter says, comes from developing networks within the community of professionals that serve HNW clients, including lawyers, accountants, private banks, family offices and wealth consultants. You must be able to demonstrate to these professionals that you have a systematic and repeatable process to provide the clients they refer with a consistently high level of service.
> Understand their needs
HNW clients want advice regarding their diverse needs, which typically include tax and estate planning, trusts, insurance and philanthropic plans.
“They might not need complex investment portfolios,” Porter says. The investment side comes later, following the needs-analysis process.
These clients’ primary goal is to “ensure other generations are cared for,” he says. “A lot of time must be spent up front to understand the needs of clients as well as their families. Different families have different objectives.”
> Establish a process
You should have a defined process for the execution of the plans of your HNW clients. For example, Porter’s firm uses a simple four-step process, which includes: needs assessment; plan design; implementation; and management and monitoring. Execution of the plan usually involves the participation of various professionals who are experts in their respective areas.
> Work with other professionals
No advisor is an island when it comes to serving HNW clients. You must have ready access to professionals who can collaborate with you to meet the varying needs of your HNW clients. Examples include tax, trust or legal experts — depending on your clients’ needs.
“The ability to execute in a timely manner is critical to developing close relationships with HNW clients,” Porter says.
> Generate interest
Advertising is not necessarily the most effective way to generate interest among HNW clients, Porter says. “We spend a lot of time with professionals in the space to identify trends that will benefit our clients,” he says. Cidel also sponsors charitable and corporate events to gain brand recognition with targeted clients.