For financial advisors looking to shift their business toward serving the special needs of high net-worth (HNW) or ultra-high net-worth (UHNW) clients exclusively, there is more than one path to success. However, the approaches that work in attracting this unique group have one specific feature in common: they are attuned to the particular psyche and expectations of affluent clients.
To succeed in the affluent marketplace, you need to adopt a HNW mindset in how you operate. Recently, I spoke with three advisors who target UHNW clients (i.e., those with investible assets of more than $5 million) about what makes those clients different. Here are nine key traits they share:
1. Complexity. The situations UHNW individuals face often are more complex in terms of strategies for investment, taxes, estate planning and charitable giving. Many advisors who target UHNW clients have moved toward a broad wealth-management focus; taxes are a particular hot button for these clients.
2. Other professional advisors. Affluent clients often have an accountant and lawyer in place who deal with taxes and estate issues, and with whom these clients generally consult on important financial decisions. Initially, at least, these clients typically give more weight to advice from these trusted professionals than from their financial advisor.
3. Investment advice. Many UHNW clients read widely, and their advisors need to be aware of major global events and have a thoughtful macro view of the world. The higher up the asset ladder a client ranks, the more often he or she is likely to maintain multiple relationships with financial services providers, mostly for diversification purposes. In such cases, the key is to be the “chief investment officer” for the client and his or her family, thus guiding the overall investment strategy and asset mix.
4. Risk aversion. Although many clients are more risk-averse as a result of major events, such as the global financial crisis, that can be especially pronounced in the UHNW space.
5. Personal attention. Affluent clients expect a higher level of personalized attention. In fact, there are many advisors focused on the UHNW space who don’t use voice mail because of the mass-market connotation inherent in asking clients to leave a message.
6. Social circles. UHNW clients often travel in the same circles as their peers, live in the same communities, vacation in similar venues and attend common social events. Thus, these clients typically prefer dealing with an advisor who is viewed as an “insider” and works with other people in their circle.
7. Exclusivity. UHNW clients seek exclusivity in their key relationships and want to work with an advisor whose focus is on similar clients. Along the same lines, UHNW clients respond better to investment strategies viewed as being tailored for serious investors rather than for the mass market.
8. Costs. UHNW clients are conscious of costs. Either they – or their professional advisors – have a good sense of the going rate for someone with their level of assets.
9. Discretion. Some UHNW clients are ultra-private regarding their finances. For example, one advisor in Toronto who works with UHNW clients purchased a table for a lunch featuring former U.S. president Bill Clinton and invited top clients to the event. One of the wealthiest clients declined, saying he wasn’t comfortable attending a lunch at which people he knew might find out whom he was using as his financial advisor.
Thus, your key first step if you’re looking to serve the affluent market and attract high-end clients is to ensure that your mindset and practice are 100% aligned with your prospects’ expectations and needs. Once you’ve done that, you need to tell your story in a unique and compelling way.
For example, an advisor at a bank-owned firm in California – let’s call her Gayle, – describes how she made the transition to focusing on high-end clients from a primarily mid-market practice with a scattering of top clients:
Fifteen years ago, Gayle borrowed from Toyota Corp.’s 1989 playbook in launching Lexus to compete against BMW AG and Daimler AG’s Mercedes-Benz brand. Not only did Lexus have a dedicated design team, manufacturing plant and a distinct advertising campaign, but, rather than selling Lexus models through Toyota’s existing dealers, Toyota created an entirely new dealership network. Toyota knew it couldn’t compete against BMW and Mercedes-Benz with existing dealers’ infrastructure and mindset.
Gayle, in building on her already successful business, took the following steps to get her practice ready for HNW clients:
- She reallocated existing clients among her two associate advisors, giving one associate clients with less than $1 million in investible assets and the other associate clients who either had investible assets of more than $1 million or who demonstrated potential to hit that threshold in the near term.
- Gayle arranged with two other advisors in her office to split the cost of an experienced paraplanner who could develop high-end financial plans. (This was well before head offices put a focus on financial planning.)
- For meetings with affluent clients and prospects, Gayle arranged the use of a meeting room in the bank’s private-banking unit, located on another floor in her building
- Gayle invested in higher-end stationery and marketing material. She also upgraded her wardrobe and gave each associate advisor a clothing allowance. (Gayle says that clothes may not be as important for male advisors who are targeting HNW male clients, but are essential for female advisors dealing with HNW female prospects.)
After having done all that, Gayle put in place the following plan to attract HNW clients:
- She made a conscious decision to position herself as the go-to resource for divorcees in her community who had at least $1 million in investible assets. These prospects often were longtime wives of senior corporate executives, business owners, athletes or entertainers who needed help in managing substantial settlements. Gayle already had two clients in this category, so she had a base from which to start.
- Gayle then devoted 100% of her marketing efforts to pursuing this HNW group. Over a 12-month period, she earned a designation as a divorce specialist and had two articles published that outlined financial hazards for women going through divorce. She included these articles on her website (this was in the early 2000s, so fairly early days still for the Internet). These articles also helped her build a network of four divorce attorneys involved in the kind of high-profile cases Gayle was targeting.
- She turned these and other articles into a marquee publication, which is updated annually and available on her website for a $25 donation to a local women’s shelter. This publication has become one of her best prospecting tools; she gives clients a copy to pass along to friends and tells clients that she’s happy to send it to anyone they know who might find it helpful.
- Based on an invitation from a client who served as the co-chairwoman for a high-profile fundraiser, Gayle joined the organizing committee for an event that targets affluent members of her community and thus increased her interaction with these people.
As Gayle’s business grew, she focused on her practice’s evolution. Today, her target clients have a minimum of $2 million in investible assets – although she always makes exceptions for referrals from her network. She charges for an initial assessment and plan; women who engage with Gayle for the assessment almost always become clients. Then, five years ago, she began targeting a complementary niche of women who’ve become widows and need help in navigating the resulting financial complexities. Today, Gayle has an associate who is dedicated to serving women in that category.
Thus, Gayle successfully incorporated the following five strategies that helped her attract HNW clients:
1. She made herself the safe choice for her target community of divorcees who have at least $1 million in investible assets.
2. Gayle targeted the key influencers of these women.
3. She developed an in-depth assessment of these women’s financial situation and hit an important hot button for her target market.
4. Gayle put herself in a position to obtain introductions from clients.
5. She made herself an “insider” in her clients’ circles.
Key to Gayle’s success was that she had the discipline to focus on a target clientele with which she had an affinity, whose needs she understood well and to whom she could offer standout value. She also had a small base of clients from which to start and shifted the focus of her practice incrementally, continuing to serve existing clients as she put her marketing efforts into reaching out to the niche she had chosen.
This commitment to altering the way you do business to serve a niche, then “narrowcasting” your marketing focus, is a common trait among successful advisors who cultivate HNW clients. Although many advisors cling to the traditional, generalist approach in which they meet with a business owner in the morning, with retirees over lunch and with clients planning for retirement in the afternoon, advisors who are successful in serving the HNW market understand the power of focusing on a narrow group.
Another example of this approach is an advisor – let’s call him Tim – who started off dealing with retirees, but later found himself competing with many advisors going after the same niche. Only after targeting snowbirds who spend up to six months in Florida did Tim’s practice take off. A key element of his marketing is an annual morning workshop for clients to which he invites prospects.
This workshop is laser-focused on key issues for snowbirds, featuring an expert on U.S. estate law and someone from the police department to talk about how clients can secure their homes in Canada while away.
Tim attests that once a prospect attends a workshop, the conversion level is almost 100%; other advisors can’t compete against Tim’s expertise in the issues affecting snowbirds.
Furthermore, Tim makes two to three trips to Florida each winter to meet face to face with clients, trips from which he has yet to return without a new client.
The key to success in the HNW or UHNW space is your willingness to refocus your practice on a niche in which you can offer unique value. Start by looking at your existing clients for one or two that might provide a starting point. After doing that, put a plan in place to make the change. Your shift won’t be fast and or easy, but do it right and results will follow.
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