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Working with high-net-worth clients can present some unique opportunities if you’re able to establish long-term relationships, generate more referrals and increase business revenue. Managing these types of clients requires specialized knowledge and understanding of the needs and concerns that wealthy investors often have. Knowing what to expect can help you balance serving your high-net-worth clients with maintaining a growing practice.
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What Makes High-Net-Worth Clients Unique?
High-net-worth clients, meaning individuals with $1 million or more in investable assets, typically have more complex needs than other types of clients. Their primary concerns may center on developing strategies to preserve assets, minimize tax liability and seamlessly pass on wealth to the next generation.
A high-net-worth individual may require an advisor with expertise in tax planning, estate planning and wealth management. Their investment portfolios may hold more than the typical mix of stocks and bonds, and include alternative investments such as private equity, real estate, precious metals or collectibles.
High-net-worth clients may have established family offices or be interested in creating one. They might own businesses and need help with developing a succession plan that allows them to exit when they’re ready to do so. Or they may be preparing to step up their philanthropic efforts and are wondering where a private foundation fits into the picture.
Advisors who work with high-net-worth clients should be equipped to offer holistic financial advice that spans a broad range of scenarios.
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Managing High-Net-Worth Clients Effectively
If you’ve successfully attracted high-net-worth clients to your business, the next step is ensuring that you can retain them without stretching yourself too thin. Developing a game plan that covers the following points can help you be the advisor your clients need while running a thriving practice.
1. Emphasize Value
High-net-worth clients may be in a better position to pay more in advisory fees, but they want to ensure they’re getting something of equal, if not greater, value in return. That means moving beyond basic portfolio management. Ask yourself what you’re currently doing to provide that value, and where you may need to step up your efforts.
For instance, a wealthy client may be looking for ways to maximize the tax efficiency of charitable donations while retaining some control over how donated funds are used. An advisor with experience advising clients on donor-advised funds (DAFs) on behalf of clients has a competitive advantage, as providing that service eliminates the need for the client to look elsewhere for help.
Understanding what value means to high-net-worth clients can make it easier to deliver it. For some clients, that may mean prompt communication; for others it might be access to alternative investments or assistance with legacy planning. Asking the right questions during your initial meeting with a prospect or client can help you drill down to what matters to them most.
2. Know Your Place on the Team
You may be just one individual that a high-net-worth client turns to for financial advice. They may also have a certified public accountant and estate planning attorney who assist them in making decisions. Cultivating relationships with these centers of influence can help you better understand your client’s needs, and it may also result in new referrals for your firm.
It’s to your advantage to know where you fit into the team and what your client expects from each of you. That can prevent misunderstandings that might arise should you or another team member overstep their bounds. It can also facilitate greater accountability and ensure that everyone is fulfilling their role.
If your client has assets held away, that’s something you’d want to know as well, as it can better inform your decision-making. And if you’re emphasizing a holistic planning approach that’s value-focused, you may have an opportunity to persuade your client to bring those assets under your management.
3. Think Long Term
Building trust and loyalty are critical to retaining high-net-worth clients. How you interact with clients and make them feel can determine how long they remain your client.
Again, ask yourself what you’re doing or have to offer that is designed to encourage loyalty. That means more than just holding client appreciation events a few times a year or offering incentives for referrals.
Here are some common examples of long-term needs that a high-net-worth client might have and possible strategies you could offer as an advisor.
| Charitable Giving | Wealthier clients who want to pass on a sizable portion of their estate to charity may benefit from a variety of strategies, including the use of charitable remainder trusts and qualified charitable distributions from an individual retirement account. |
| Business Planning | Business clients may need help with establishing or maintaining retirement plans for their employees, developing additional incentives to encourage employee retention or building out a succession plan that includes key person insurance. They may also seek advice on how to leverage loans to grow their businesses. |
| Legacy Planning | Wealthy clients may have legacy planning needs that require the establishment of one or more trusts to manage assets during their lifetime and beyond. They may also need advice on how to manage transfers of wealth in blended family situations. |
| Tax Planning | High-net-worth individuals may generate income from multiple sources, including businesses they own, real estate investments and royalties. They may look to a financial advisor for help with minimizing their tax exposure in order to preserve wealth. |
4. Close the Generational Gap
High-net-worth clients may plan to pass on the bulk of their wealth to their children or other relatives. As their advisor, you have an opportunity to retain those assets under management by employing generational wealth planning strategies.
Sitting down with your clients and their heirs is a good starting point. This is your chance to get the conversation flowing and discuss your clients’ expectations for passing on wealth, as well as what their heirs expect.
Your client may have specific values they want to preserve alongside their wealth, something a family sit-down would allow them to communicate clearly. Likewise, their heirs may have questions or concerns they may not have felt comfortable addressing directly.
Acting as a facilitator of these conversations is a way to reassure your clients that you’re acting with their needs in mind while providing their heirs with insight into what it is you do and how you might be able to help them in the future.
5. Utilize Technology
Managing high-net-worth client relationships can be more time-intensive and it’s important to have a strategy for balancing their needs against your goals where business growth is concerned. Implementing systems and strategies that are supported by technology can make it easier to do both.
Some of the areas of opportunity for implementing software solutions can include:
- New client onboarding
- Portfolio management
- Marketing
- Lead generation
- Back-end processes, such as accounting and reporting
- Compliance
Automating or outsourcing day-to-day tasks can free up valuable time in your schedule that you can devote to serving your clients. It may take some time to build out your tech stack, but it may be well worth the effort if it allows you to maintain a steady pace of growth and exceed client expectations.
6. Uphold Strict Confidentiality Standards
Maintaining client confidentiality and privacy is critical for retaining high-net-worth clients and it’s also a core compliance concern. Wealthy clients may naturally expect their advisor to safeguard their personal and financial information, and use the utmost discretion when sharing those details with other team members becomes necessary.
Developing a written policy that details how client information is stored, accessed and shared can offer reassurance to high-net-worth clients that the proper steps are being taken to protect their data. Utilizing secure, encrypted portals for communication and client access, thoroughly vetting third-party vendors who have access to client data and controlling who has access internally adds to the layers of protection.
Provide clients with a detailed explanation of each step your firm takes to ensure confidentiality, even if they don’t ask for it directly. In doing so, you communicate your willingness to be transparent and demonstrate that you take client confidentiality seriously.
7. Embrace Personalization
Clients, regardless of net worth, do not want to be treated as just a number on the page. Personalization conveys the message that you see your clients as people and understand who they are beyond the assets they entrust to you.
As an example of how you can add a personal touch, consider your email newsletter. Rather than sending a generic message with updates on the firm and a note telling clients to reach out if they need help, you could offer them a bulleted list summarizing the latest market updates. Or if you know your clients are interested in alternative investments, you might invite them to a private webinar you plan to hold discussing how the CLARITY Act may impact wealthy crypto investors.
Sharing information that reflects who your clients are and what matters to them shows attention to detail and understanding, both of which can encourage engagement and loyalty over the long term.
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Frequently Asked Questions
What Is a High-Net-Worth Client?
A high-net-worth client or high-net-worth individual is generally someone who has $1 million or more in investable assets, while many firms define “very high-net-worth” as someone with $5 million or more. An ultra-high-net-worth individual is someone who has $30 million or more in investable assets. High-net-worth is different from mass affluent. Mass affluent clients generally have substantial assets but less than the $1 million in investable assets commonly associated with high-net-worth status.
How Do You Communicate With High-Net-Worth Clients?
High-net-worth clients may have different expectations for communication than other clients concerning how you’ll communicate, how often you’ll be in touch and how quickly you’ll respond when they reach out to you with questions. Establishing those expectations from your initial meeting can help you handle communication more effectively.
How Do You Attract High-Net-Worth Clients?
Attracting high-net-worth clients to your business begins with developing a targeted marketing plan that speaks to their unique pain points. For instance, it’s important to ensure that your messaging is specific rather than generic and is positioned where it’s most likely to be seen by wealthy clients who may be looking for financial advice. Leveraging referrals is another way to expand your client base to include high-net-worth individuals.
Bottom Line
High-net-worth clients may place different demands on your knowledge, expertise and time but working with them can be rewarding on multiple levels. The better you get to know what these clients need, the easier it becomes to satisfy those needs and grow a sustainable business.
Tips for Growing Your Advisory Business
- You may consider branching out into lead generation as a way to gain more exposure. SmartAsset AMP (Advisor Marketing Platform) is our holistic marketing service financial advisors can use for client lead generation and automated marketing. Sign up for a free demo to explore how SmartAsset AMP can help you expand your practice’s marketing operation. Get started today.
- Turning your focus to high-net-worth clients may require you to rethink your client-advisor ratio. An ideal ratio is typically 50 to 150 clients, but you may decide to keep that ratio on the lower end if you’re exclusively working with higher net worth individuals. That can allow you to provide maximum value to the clients you work with and make your daily schedule less taxing.
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