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How to Swim Upstream

Three years ago, Kalita Blessing set out on a mission. She was determined to rev up her bottom line. Blessing, a principal with Quest Capital Management in Dallas, met with a business coach, and came up with a promising though daunting plan: Acquire more clients with $5 million or more in assets. To that end, she developed relationships with about 10 CPAs and estate-planning attorneys, from whom she

Three years ago, Kalita Blessing set out on a mission. She was determined to rev up her bottom line. Blessing, a principal with Quest Capital Management in Dallas, met with a business coach, and came up with a promising — though daunting — plan: Acquire more clients with $5 million or more in assets. To that end, she developed relationships with about 10 CPAs and estate-planning attorneys, from whom she requested referrals. She analyzed her book of business, focusing on the top 20 clients, wining and dining them, and taking their families to football games and other events. And she expanded her advisory team from three to five so she could provide better service.

It has worked. Now, Blessing says, profits have doubled, revenues have tripled, and the number of clients worth $5 million and up has grown from five to 20. Assets under management have soared to $250 million. “I'm very pleased,” says Blessing.

Many advisors are in the same boat as Blessing was — trying to snare a wealthier client base to juice revenues. And the field is wide open. About 30 percent of millionaires say they don't use a financial advisor, according to “Fidelity Millionaire Outlook,” a recent survey of 2,500 financial decision makers at households with at least $1 million in investable assets. About 13 percent of those respondents plan to start using an advisor over the next year.


The fact is, the definition of just what “more affluent” means may differ from practice to practice. For one advisor, grabbing richer clients may require targeting accounts with $1 million and above, for another $5 million and up and for yet another, $10 million plus. Of course, the wealthier the target, the tougher the challenge. Still, there are some rules that apply to just about anyone who is trying to attract more affluent accounts, from how to get started to where to find prospects. And you can pretty much always expect the process to involve a great deal of work. “You don't just all of a sudden put out a plaque that says ‘I'm a wealth manager,’” says Greg Ghodsi, an advisor with Raymond James Financial in Tampa, whose firm manages $300 million in assets, and focuses on clients with $2 million and more. “There's a lot you have to do to change clients' perceptions.”

The first step is deciding just how you're going to distinguish yourself from all the other advisors chasing after the same prospects. The key is finding the right niche. In some cases, that means gaining expertise in areas of interest to wealthy clients — anything from alternative investments to high-end estate-planning strategies or, for the $10 million-and-up crowd, family governance issues. Generally, to win high-net-worth clients, you'll need to be conversant in what Chip Bauder, senior vice president of wealth solutions for Raymond James calls “the big three”: portfolio design, charitable giving and estate-planning techniques.

If you're not up to speed in these areas, then take some courses. Fusion Financial, an Elmsford, N.Y.-based financial services firm, for example, provides a symposium for its advisors on alternative investments. There's also a new professional designation from the Investment Management Consultants Association and the University of Chicago's Graduate School of Business, the chartered private wealth advisor, aimed at advisors who cater to clients with $10 million and above in assets. It covers such things as advanced income tax-planning, issues of concern to business owners and charitable giving.

Or you can consider other niches. The best way to figure out which one to choose is generally determined by looking at your own client base. Your goal is to find people not just with a certain level of assets, but who share other characteristics as well. They may be business owners, say, or automobile dealers. In addition, “look at length of the relationship, willingness to refer — the softer issues,” says David Welling, vice president of strategic marketing programs at Schwab Institutional. Then, pinpoint the top five to 10 clients who either fit the bill, or who are likely to know people who do, and ask them for references.

In some cases, you can even start with just one client. Bauder points to an advisor who, after analyzing his book, decided to focus on corporate executives. He began with one high-net-worth executive who was a long-time client, learning everything he could about the retirement plans, stock options and so on at that client's company. Then, he asked the man to refer him to colleagues. Eventually “he built his entire practice around this particular company,” says Bauder.

You also have to spend time in places where your target market is likely to be found. “Wealthy people hang out with other wealthy people,” says John Nersesian, managing director of Nuveen Investments. At a minimum, that means you should join the boards of a few local charities, and become a member of a nearby country club. Also, try to find an organization that involves a real interest of your own. Nersesian points to an advisor and avid sailor who two years ago joined the local yacht club, figuring that many of the members — especially the ones who owned their own yachts — were the kind of high-net-worth people he was after. He's gained three new accounts with assets of $15 million in total from that affiliation, says Nersesian.


At the same time, it's equally important to develop a group of accountants and estate-planning attorneys you can work with, and who can refer their own clients to you as Blessing did. Where to find them? Ask your high-net-worth clients for the names of their own CPAs and attorneys, and then ask them if they'll make an introduction. To get these professionals on your side, make an effort to find out more about their own practices, the types of clients they're looking for, and then send a bunch of business to them right away. “If you ask them the right questions and refer business to them, it comes back in spades,” says Blessing.

If you already have a group of professionals with whom you work, then you should meet with them to explain the new type of client you're looking for. Take Kevin Hoyle, a partner in HoyleCohen, a five-year-old San Diego-based firm. Recently he and his partner developed a plan to more than double assets to $1 billion by 2012 (from $400 million in assets today). To that end, they analyzed their client base, and discovered they had a number of high-net-worth physicians and corporate executives. They then decided to increase their focus on these markets. They talked to the accountants and attorneys they had already been working with, “to tell them our story,” says Hoyle. They're still reaching out to other professionals, but they've already received eight referrals in two months for people with more than $1 million in investable assets.

Craig DuVarney has taken this kind of effort a step farther. DuVarney, who runs a four-year-old firm in Concord, Mass., has concentrated his efforts on one estate-planning attorney, and has turned that relationship into a successful competitive weapon. After writing a financial plan for each new client, he invites the lawyer to his office to discuss estate-planning issues. The attorney has referred many accounts to him as a result, and the effort has allowed DuVarney to take his practice up a notch. “It helps me provide a more comprehensive level of service,” he says. His firm manages about $50 million in assets, and the majority of his 100 clients have $2 million or more in assets, says DuVarney.

While referrals from professionals and clients are the number one way to get high-net-worth accounts, you can also try seminars, as long as they're advertised and carried off with a light touch. For example, Nersesian points to a group of advisors who recently held a program for homebuilders and their clients at an Oriental rug retailer. The talk focused not only on how to buy an Oriental rug, but also included a discussion of income tax strategies, and the impact of the alternative minimum tax. And that advisor who joined the yacht club? He held a seminar on boat insurance.

It may not be realistic to shoot for your ultimate goal right away, however. Sometimes, you'll have to start by targeting somewhat smaller game, and then move up as you establish your reputation. Richard Van Der Noord, head of Van Der Noord Financial Advisors in Greer, S.C., for example, set out to focus on clients with $1 million and more in assets when he started the firm in 2002. But he began by looking for clients with a half million dollars in assets, “who palled around with a lot of multi-millionaires,” he says. When he spent time with the smaller fry, going to their houses for dinner and attending other events, he would meet their friends, and was able to turn some of them into clients. Van Der Noord recently upped his minimum requirement to $1 million from $500,000 last year, and $250,000 before that.


Perhaps the toughest part of the effort, for many advisors, is what to do about long-time clients who don't fit the new profile. You have a few options. Some advisors introduce a tiered service model, giving clients with more assets a higher level of service. In some cases, you can grandfather in valued, lower-net-worth clients who've been with you for many years. Van Der Noord, for example, has kept his Macon, Ga., office where he used to work, where he still has several long-time elderly clients. Or you might have more senior advisors address wealthier clients, and hand less affluent ones to junior advisors.

Be prepared to increase the level of service you provide. “High-net-worth clients are interested in personalized service,” says Stuart Silverman, president of Fusion Financial. Blessing, for one, expanded her staff in part to be able to answer client phone calls within two hours. Van Der Noord has kept the number of clients he works with to 60 so that he can provide the requisite level of attention. He only makes client appointments twice a week in one of three specific time slots, posts a personal greeting on the lobby marquee for each client and has his or her favorite drink waiting. He also provides customized reports to fit each person's preference. One may want to see the tax basis on investments, for example, while another may like to get an accounting of cash flow. And he contacts each client by mail, email, or telephone or has an in-person meeting 30 times a year. The assets managed by his firm have almost doubled to $50 million since he implemented this strategy.

Then there's the matter of your marketing program: You'll also have to take that more up market. “Your materials should suggest how you'll add value to the high-net-worth person,” says Nersesian. And doing that may require extra help. Hoyle, for example, hired a marketing firm to develop a marketing plan, and revise his website and other promotional materials.

None of this comes cheap, of course. In fact, you can expect your overhead to skyrocket at first. That's also because you'll probably need to add staff and even move to pricier digs. Van Der Noord, for example, says his overhead has tripled when he includes staff salaries and office rent. “You can't attract higher-net-worth people if you've got a card table and folding chairs,” he says.

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