You Can Win Ultra-Affluent Clients. Here’s How. – Episode 36
One of the smartest moves you can make as a financial advisor is to understand the wants, needs and concerns of ultra-wealthy investors—those with $25 million or more in net worth.
One big reason: Advisors with the wealthiest clients tend to generate the highest incomes. Positioning your practice to attract these investors can be a key driver of your success going forward.
If you think there’s no way to break into this lucrative market, think again. In many ways, the ultra-wealthy aren’t getting the attention they want from their existing advisors. That gives you an opportunity to earn their business—if you have the right business model.
KEY TAKEAWAYS
- Investors with $25 million or more in net worth aren’t getting many of their key needs met by their existing advisors.
- A family office business model is designed to deliver the services and solutions that the ultra-affluent want.
- Make inroad with ultra-affluent referral sources—such as investment bankers.
FACE THE FACTS
CEG Insights surveyed 350 households that had more than $25 million in net worth, not including the value of their primary residence. Some of the key findings:
- There are big “service gaps” between what the ultra-wealthy want and what they get. When it comes to one of the key issues facing HNW investors—estate planning—a full 84.8% of the ultra-wealthy want wealth transfer advice. But a mere 35.5% say they’re actually getting such advice from their advisors. Likewise, more than 90% say they want asset protection planning to be part of their overall wealth plans—but just 32.4% report receiving such planning.
We found similar sized gaps in areas such as risk management and various types of insurance-based planning. The upshot: The ultra-wealthy simply aren’t getting their needs met in key areas of wealth management.
- The ultra-wealthy value the virtual family office approach to wealth management. A sizable majority—63.2%—of the ultra-wealthy are interested in having their advisors use a family office-style approach. Their biggest reasons for seeking this structure include a family office’s ability to integrate wealth management services and personal services, the ability to access a curated network of experts in various areas, and the ability to get personalized investment strategies that leverage advanced technologies.
- The ultra-wealthy rely on referrals to find their advisors. Family or peer recommendations play a critical role in the ultra-wealthy’s advisor selection process, with 58.6% of clients finding their advisor through a referral. Business associates and investment bankers are also important sources of referrals, accounting for nearly 30% of new client relationships.
INSIGHTS INTO ACTION
Based on CEG Insights’ findings, consider the following action steps:
- Build relationships with ultra-wealthy referral sources. If you don’t already serve this cohort, it’s unlikely your existing clients will send them your way. Instead, build relationships with the professionals who are serving the ultra-wealthy—such as investment bankers, CPAs, business brokers and estate planning attorneys. These are the people the ultra-wealthy often look to for advisor referrals.
- Implement a virtual family office business model. The ultra-wealthy are looking for advisors who can better meet their needs and who can coordinate the efforts of the professionals addressing those needs. A virtual family office approach is designed to bring experts together and work in concert to serve the ultra-wealthy in areas such as investment management, tax optimization, legacy and estate planning, risk management, lifestyle and health management, and philanthropic services.
The ultra-wealthy are within your reach—if you position yourself to deliver a level of service and solutions that will address their most pressing concerns.
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