Broker Don Chambers hosts a roundtable dinner every year for his better clients. The clients set the agenda and invite the guests they want. Chambers pays for the dinner and provides answers to questions clients or guests pose.
It is a way of maintaining friendly contact with clients, demonstrating appreciation for their business and doing a little prospecting.
One of Chambers' clients is a wealthy widow. She and her husband had accumulated wealth over a lifetime while raising six children. At one of the dinners, this client invited her grown children. Using subtle conversation and a few leading questions, Chambers discovered that one son worked for a successful computer firm and had a lucrative income.
Today, the son of his widowed client has an account with Chambers worth $3 million.
"That was definitely hidden wealth," says Chambers, a Salomon Smith Barney rep in Portland, Ore. "I knew he was a smart guy and gainfully employed, but he doesn't live in an expensive house and was no trust-fund baby."
The client just happened to have a small fortune in his company's stock options. "I was surprised," Chambers says. "I've known the family for years."
There is no magic formula for finding and attracting high-net-worth clients, Chambers says. Luck may play a part. But you do have to "know your stuff," he says. "Investors today are sophisticated."
Prospecting for wealthy people doesn't begin or end with a cold call. "I consider prospecting as everything you do up to the first meeting," Chambers says. Even in casual conversation, he reinforces that he is a different kind of broker.
"I practice portfolio management using separate accounts rather than mutual funds," Chambers says. He also helps the wealthy see the whole picture. "I bring estate, retirement, stock options and all their investments together."
Keep asking questions of prospects and drill down to uncover assets, Chambers suggests. "As potential clients, they're genuinely looking for someone who has the answers."
Finding Money in Motion Doctors, lawyers and dentists seem like logical prospects, but they aren't who Jim Eckert targets. He prefers to prospect for clients who run businesses rather than professional corporations.
"The professionals are who a lot of financial advisers go after," says Eckert, a Dain Rauscher rep based in Edina, Minn. "They make a lot, but they also spend a lot. I'm more interested in the small-business owners. I've had great experience with small-business owners [who are] getting ready to sell the business or retire. I go after what I call `money in motion.'"
One of Eckert's clients sold telephones and telephone parts. Another client ran a small business putting documents on microfilm or microfiche. "Those didn't seem like high-net-worth clients at first," Eckert says. But they became wealthy once they sold their businesses.
"It's the clients who are ready to retire or leave the business that could have hidden wealth," Eckert says. "And after working all their lives, they usually want someone they trust to manage their money for them."
Small-business owners who aren't selling their enterprises can still be good prospects, Eckert says. Look for people who aren't putting all their money back into the business.
Admiring the Toys Jeff Smith, a First Union Securities rep in suburban Toledo, Ohio, recalls his son playing with a handmade toy boat constructed by the father of his son's friend. "I know a little woodworking, so I dressed up the boat my son had with fancy rigging, and he showed it to the other kid," Smith says. That child's father admired Smith's work, and the two men got in touch.
During a simple conversation about boats, Smith discovered this man had another boat - of the non-toy variety - a $2 million boat in the Caribbean. The father became an important client, all because of a child's toy.
Smith has also used his own toys for uncovering wealthy prospects. A former captain in the Marine Corps, Smith has a 13,000-pound 1969 troop transport truck.
A neighbor, whom Smith rarely talked to, saw the truck and came by to investigate. As it turns out, the neighbor collects trucks and matter-of-factly told Smith he stores 13 of them. That truck enthusiast was so impressed with Smith (and his vintage military wagon) that he became a client and brought several referrals.
"I knew the cost of storing 13 trucks made him a high-net-worth individual," Smith says.
Smith's USMC truck still goes to high school homecoming games and rumbles along in area parades - and has landed Smith at least four accounts.
Smith urges brokers to "look at the toys, not the size of their houses" to identify high-net-worth people. "You want to hear them say, `I just bought 20 acres of land,' not `I just bought a new stereo,'" he says.
Doing the Unusual Working unusual hours can turn up unusual prospects. A wealthy client of Pete Giolitto's first walked into the office one Saturday while Giolitto was there catching up on paperwork. The client was wearing a sweatshirt and jeans, and wanted to "talk to a broker," Giolitto recalls.
That client was stood up by a broker at a different firm who blew off a Saturday appointment. Big mistake. He brought Giolitto a $2 million account and 15 referrals.
"You've got to be willing to work above and beyond," says Giolitto, a rep at First Union Securities in Rockford, Ill. "And never overlook an opportunity."