By Dean Cook
Today, there are more millionaire investors in America than at any other time in history.
The economic resurgence paired with the markets’ performance over the past 10 years has created a target-rich environment for advisors looking to build their high-net-worth (HNW) client base. In fact, an investor with $250,000 in 2008 who invested in the S&P 500 Index would now have a portfolio worth more than $1 million if they simply did nothing during that time. In other words, yesterday’s mass affluent are today’s HNW investors.
There is just one problem: A handful of large-scale wirehouses dominate the market for HNW investors. While they may have multimillion-dollar advertising budgets, I firmly believe that advisors of all sizes can compete for HNW investors if they understand how to attract HNW clients, excel at offering the services they demand and provide a superior client experience.
Attracting HNW clients
Attracting HNW clients to your firm begins with marketing. I’m a strong believer in creating a robust digital presence though a website and targeted social media marketing. However, what you say is just as important as how you say it. Effective communication with HNW investors requires a clear voice to deliver your brand message. For some advisors, that means embodying and convincingly articulating their core competencies. The most effective method is to stress education and practical insights, instead of obvious sales pitches.
For other advisors, a strong brand message may require adding new competencies. Luckily, technology can help advisors add new skills overnight. One great example is the BizEquity integration on the Orion Advisor platform. Using big data, BizEquity provides valuations for private businesses. With that business valuation data, advisors can educate business owners on how to best navigate a liquidity event. This simple piece of technology helps business owners understand the value of their businesses, while helping advisors build the trust required to turn an illiquid prospect into a liquid HNW client.
No matter what your core competency, all advisors should ask themselves a simple question: Is the goal to build a wealth management firm or is it to be a wealth manager? There is a distinction, because those truly focused on building a wealth management firm realize that they must outsource and/or automate their technology, back office and investment management operations. Failing to outsource and automate key operations means you will always be the COO, not the CEO, and your marketing efforts will suffer.
Offering the services in demand
The list of services in the highest demand by HNW investors should come as no surprise. They want tax management, asset preservation, distribution strategies, philanthropic strategies and estate planning. What they do not want is to spend three hours talking about a comprehensive plan for each. HNW investors are busy people. I’ve found it most effective to drill down on the single most important service each HNW investor is seeking. Then spend 45 minutes getting that right. Getting your foot in the door is more important than trying to go all-in at once. Focusing on a single problem helps you gain trust as you demonstrate your competency.
Delivering a superior client experience
A superior client experience starts by ensuring that all the back office operations happen correctly the first time. HNW clients don’t have time to resubmit a form or answer questions twice. Here, I think advisors have only two options: 1) employ only the very best people who can deliver that client experience or 2) rely on the best technology to streamline operations.
Once you can deliver flawless onboarding and back office operations, a superior client experience requires meaningful engagement and a customized plan. Everyone in the industry can provide a financial plan. The difference between a good client experience and a great client experience is whether the advisor finds a way to meaningfully engage with the client. One of the easiest ways to engage is to understand the personality of the client and communicate with them based on their core values. For example, if you are dealing with an analytical client, drop the small talk and get right to the numbers. But, if you are talking with a transactional client, you should play up the small talk and keep the numbers discussion to a minimum.
Offering customization is the final piece of the client experience puzzle. Not every HNW client will require an SMA. What they will require is flexibility, convenience and preference. Be prepared to say yes when an HNW client makes a request. Being able to deliver a customized experience will go a long way in building the client’s trust.
The opportunity to gain HNW clients has never been better. Advisors of all sizes have the ability to compete for HNW clients. The keys to success lie in marketing, the services you offer and the client experience you provide—not in how much you spend on TV ads.
Dean Cook is chief executive officer of FTJ FundChoice.