Recently, a California-based advisor explained how she shifted her practice to focus on affluent clients. Her success was the result of a simple but thoughtful five-step plan.
The catalyst for this conversation was an email from a Texas advisor with one of the top four American firms, who asked about tapping into multi-million clients. I reply to every question from advisors and, where it makes sense, use the questions in my articles. The Texas advisor’s question and my answer are below. Many of the principles of attracting high-net-worth (HNW) clients apply to prospecting in general.
Here was his question:
How do I attract super-affluent clients?
In order to take my business to the next level, I need wealthier clients. I’ve been in the business 15 years and have assets of $100 million. The average assets per client of some of the top advisors profiled in Barron's is over $20 million. My average client asset level is $800K, with no client with AUM over $8 million.
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I have met some of the Barron's top 100 advisors at conferences and they aren’t any smarter, harder-working or more knowledgeable than I am. But the results clearly indicate that they are better at marketing to high-net-worth investors. I’m not necessarily seeking $20 million clients, but need more with $5 million and $10 million. The difficulty is that there is no specific path; I'm guessing if you profiled 10 of the top Barron's advisors, you would get 10 different marketing methods. Can you help?
How super-affluent clients are different
This advisor is quite right that there are a number of different tracks to attract affluent clients. That said, these approaches do have one feature in common: They are attuned to the psyche and expectations of affluent clients.
To succeed in the affluent marketplace, you need to adopt a HNW mindset in how you operate. Recently, I discussed the attributes of affluent clients with three advisors who target clients with assets of $5 million to $25 million:
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Complexity
Their situations are more complex in terms of investment, tax, estate planning and charitable giving strategies. Many HNW advisors have moved to a broad wealth management focus; taxes are a particular hot button.
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Other professional advisors
Affluent investors often have an accountant and lawyer in place who deal with tax and estate issues, with whom they generally consult on important financial decisions. And at least initially, it’s common for these clients to put more weight on advice from these trusted professionals than from their financial advisor.
How one advisor attracts HNW clients
The first step to attracting high-end clients is ensuring that your mindset is aligned with your prospect’s expectations and needs. Once you’ve done that, you need to tell your story. An advisor with a bank-owned firm in California, let’s call her Gayle, described how she’d made the transition to focusing on high-end clients from a primarily mid-market practice with a scattering of top clients.
Fifteen years ago, Gayle borrowed from Toyota’s 1989 playbook in launching Lexus to compete against BMW and Mercedes. Not only did Lexus have a dedicated design team and manufacturing plant and an entirely distinct advertising campaign, but rather than selling it through Toyota’s existing dealers, an entirely new dealership network was created. Toyota knew it couldn’t compete against BMW and Mercedes with its existing dealers’ infrastructure and mindset.
Building on her already successful business, Gayle did a number of things to get her practice ready for HNW clients:
- She reallocated existing clients among her two associates, giving one associate clients under $1 million and the other clients either with assets over $1 million or with the demonstrated potential to hit that threshold in the near term.
- She arranged with two other advisors in her office to split the cost of an experienced para-planner who could develop high-end financial plans. (This was well before head offices put a focus on financial planning.)
- For meetings with affluent clients and prospects, she arranged for use of a meeting room in the bank’s private banking unit, located on another floor in her building
- She invested in higher end stationery and marketing material. She also upgraded her wardrobe and gave each associate a clothing allowance. (She said that clothes may not be essential for men targeting HNW male clients, but are essential for female advisors dealing with HNW women.)
And having done that, Gayle put in place a plan to attract those HNW clients:
- She made a conscious decision to position herself as the go-to resource for million-dollar-plus divorcees in her community. These were often longtime wives of senior corporate executives, business owners, athletes or entertainers who needed help in managing substantial settlements. She already had two clients in this category, so had a base from which to start.
- She devoted 100% of her marketing efforts to pursuing this group. Over a 12-month period, she earned a designation as a divorce specialist and had two articles published outlining financial hazards for women going through divorce. She used these articles on her website (that this was in the late 1990s, so very early days for the internet.) These articles also helped her build a network of four divorce attorneys involved in the kind of high-profile cases she was targeting.
- She turned these and other articles into a marquee publication, which is updated annually and is available on her website for a $25 donation to a local women’s shelter. This has become one of her best prospecting tools; she gives clients a copy of this publication to pass along to friends and tells them that she’s happy to send it to anyone they know who might find it helpful.
- Based on an invitation from a client who was co-chairing a high-profile fundraiser, she joined the organizing committee for an event that targets affluent members of her community and increased her interaction with members of this community as a result.
As business grew, Gayle evolved her practice. Today her target clients have a minimum of $2 million (although she always makes exceptions for referrals from her network.) She charges for an initial assessment and plan; women who engage her for the assessment almost always become clients. And five years ago she began targeting a complementary niche of women who’ve become widows and need help navigating the resulting financial complexities; today she has an associate who is dedicated to serving women in that category.
Gayle successfully incorporated five strategies that attracted HNW clients:
- She made herself the safe choice for her target community of “million-dollar divorcees.”
- She targeted the key influencers of these women.
- She developed an in-depth assessment of their financial situation and hit an important hot button for her target clients.
- She put herself in a position to obtain introductions from clients.
- She made herself an “insider” within her target clients’ circle.
In next week’s article, I’ll elaborate on how other advisors are using these strategies to attract multi-million dollar clients.
conducts programs to help advisors gain and retain clients and is an award winning faculty member in the MBA program at the University of Toronto. To see more of his written and video commentaries, go to www.clientinsights.ca. Use A555A for the rep and dealer code to register for website access.
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