More than most other types of clients, high net-worth (HNW) investors use their wide networks of family, friends and business associates to choose a financial advisor.
“Referrals are absolutely the greatest source of prospects, [as] up to two-thirds of high net-worth clients come from referrals,” says Scott Guitard, vice president and portfolio manager with Fiduciary Trust Co. of Canada in Calgary.
Simply put, to obtain those referrals, you must be at the top of your game, with a history of adept and customized service that has helped you create a respected profile in the investment industry. “High net-worth clients like to see that their advisors have a presence in the marketplace,” says George Hartman, CEO of Market Logics Inc. in Toronto.
At the root of an outstanding reputation is the ability to delve fully into your HNW clients’ affairs while also building trust – not always an easy combination. This includes having a complete understanding of these clients’ personal financial circumstances, as well as familiarity with non-financial matters, such as the names and some personal information about their family members, important life events, their likes, dislikes, tastes and interests, and the clubs and other organizations to which they belong. Passions, such as charitable causes, also are likely to be important.
In addition, knowledge of family circumstances or concerns that affect your HNW clients’ overall financial situation, such as issues affecting their estate, may also be appropriate. However, accumulating this knowledge takes place over time, and you should be prepared to take multiple opportunities to know your clients better and nurture the relationships, Guitard says.
Perhaps most important, you need to be aware of your HNW clients’ sensitivity to financial risk. Compared with other clients, who may focus on wealth accumulation, HNW clients tend to be much more concerned about preserving wealth. The financial comfort they have attained often is acquired after a lifetime of effort. “They are not looking to make money; they just don’t want to lose it,” says Francis D’Andrade, senior vice president, innovation, and associate portfolio manager with Forstrong Global Asset Management Inc. in Toronto. Your role, therefore, “is to keep your clients rich, with no surprises,” he says.
The ability to work with an extensive network of other professionals, such as lawyers, accountants and investment counsellors, also is key to building and maintaining relationships with HNW clients. “Never pretend to be an expert in all areas of their complex financial affairs,” Guitard advises. He recommends ensuring that professionals who are connected with you are highly capable and likely to be a good fit for clients. If necessary, research these professionals before introducing them to clients – a poor experience for a client will reflect badly on you.
Consistency also is critical for most HNW clients, says Guitard. They want to know they will receive the same level of service, year in and year out, on matters as diverse as the number of meetings with you, portfolio reviews and reporting strategies. “How you service clients will evolve over time,” says Guitard. For example, one client may ask for reports prepared with easy-to-read graphics, while others may want tables or additional reading material. Meeting such requests will help you remain top of mind with a client, Guitard says, thus leading to more referrals.
HNW clients also are more likely to ask for personal interaction with you. Guitard says they almost always want to meet face to face; some are more comfortable meeting in their homes instead of in an office or a boardroom. “You have to work around their requirements,” he says. Being readily available also is key. Guitard says each of his firm’s HNW clients receives contact information for three people – a portfolio manager, a backup portfolio manager and a private client associate – for day-to-day communication. That way, clients can almost always reach someone.
Obtaining referrals from your HNW clients boils down to providing them with personalized attention. As D’Andrade notes, you need to go “above and beyond” for HNW clients. The resulting relationship, he adds, should become like that of a close friend “who wouldn’t fire you” and will “call you about everything that matters.”