When it comes to service, is the High-Net-Worth client the same as the mass-affluent client, only wealthier? The short answer is… not exactly. While the HNW market is diverse – the HNW GenXer approaches the advisor/client relationship differently than her Baby Boomer counterpart (transactional vs. relationship-based, etc.) – when it comes to the actual services this segment demands, expectations are similar.
For HNW clients, it’s not just about investments, it’s about what their money can do for them. Whether it’s leaving a legacy for their grandchildren, sailing around the world, or establishing a non-profit, these investors expect that you know what’s important to them, and you are both working toward that.
Investment Management is just one aspect of the HNW client dynamic. The top three things HNW clients say they pay their advisors for are:
- On-going guidance/advice to help them reach their goals (90%)
- Help in avoiding costly financial/investment mistakes (84%)
- On-going monitoring of their goals (81%). 1
Once a client reaches a certain level of wealth, their needs become more complex: they become more concerned about protecting their hard-earned assets, they are better positioned to leverage that wealth, and passing on that wealth in a tax efficient way becomes a focus.
If you are looking to establish or solidify your foothold in the HNW Market, understanding the unique expectations of this growing population and having the capabilities to meet their needs will pave the way for you to achieve long-term success.
The High-Net-Worth Client Checklist
Custom Investment Portfolios – HNW clients want to go beyond traditional asset allocation to maximize their return potential, generate income, diversify risk, mitigate taxes, and promote their values. Whether you manage the assets yourself or use a Turnkey Asset Management Program (TAMP), offering institutional-grade options such as socially responsible investing, covered call option strategies, tax-loss harvesting, and alternatives can differentiate you from the competition.
A Holistic Wealth Manager to Oversee Their Entire Wealth Journey – HNW clients need specialized support across their wealth solution needs… but they don’t want to seek out multiple points of contact. They want integrated solutions. They want to make one phone call. How do you make sure you are on the other end of that call? Develop a network and leverage it often. Promote these professional relationships with your clients, and when they need specialized support from accountants, attorneys, bankers, etc., you’ll get the call. You don’t need to be all things to all people… you just need to be the person your HNW clients call when they need help.
Technology – Today’s HNW client expects operational efficiencies, sophisticated self-serve platforms, and state-of-the-art cybersecurity protection. Nearly 85% of HNW individuals now demand increased digital interaction, including: accessing portfolio information (almost 88%) and executing transactions (87%).4 Your best opportunity to leverage top-of-the line technologies is to work with a firm offering the scale and resources to continually invest in innovation.
Withdrawal Strategies – Outliving their assets is a concern for most investors, including HNW ones. An effective advisor will have the tools to create a comprehensive plan based on asset allocation and cash flow analyses, as well as Monte Carlo simulations. You’ll need to include the development of a tax-managed divestment solution, the effects of IRA recharacterizations, and Social Security withdrawal scenarios to offer a complete picture. Working with a firm that offers end-to-end wealth management product solutions, expertise, and technologies – from accumulation to preservation to distribution – is imperative to establishing yourself as the HNW advisor of choice.
Risk Management & Protection – Risk management is not about insurance alone, though insurance plays an important role. Risk is difficult to avoid completely, but your clients can reduce it or transfer it using insurance. Offering specialized personal risk management solutions involves understanding your client’s asset base, identifying potential areas of vulnerability, assessing your client’s risk tolerance, and delivering solutions that include cost-effective life/health/liability coverage complemented by outstanding customer service. Working with highly rated, financially stable companies is key to securing your clients’ future.
Wealth Transfer – Whether clients are interested in establishing a trust, creating an estate plan, or developing a charitable giving strategy, integrating these endeavors with investment management and tax planning is key to maximizing impact. Both Trusts, which protect your client’s assets and ensure your client’s wishes for the distribution of assets are followed, and charitable giving options, such as Donor-Advised Funds and Charitable Remainder Trusts, are impactful tax mitigating strategies as well. Working with one firm that offers the products, relationships, and expertise and support you is key to effectively serving this market.
There are myriad ways to serve the HNW market. The foundation of any successful client relationship is connection… a connection based on transparency, communication, shared values, and accessibility. Establishing and maintaining that, in itself, takes time. So, how to you meet the needs of your HNW clients, while running a business, engaging your community, prospecting for new clients, and fulfilling your CE requirements?
You work with a firm that delivers on every front, while leaving you in control. A firm that gives you the resources – and flexibility – to succeed on your own terms.
AssetMark has been that provider for thousands of your peers. Reach out to us to discuss where you are now, and where you’d like to be. Let us show you how we can help you create the business you’ve envisioned. Together.
Access. Accountability. AssetMark.
Sources
1. Source: 2019 High-Net-Worth Investor Study; Investment & Wealth Institute.
2. Source: Spectrem Group; Wealth Management Redefined 2021.
3. Source: The Cerulli Report, US Advisor Metrics 2020, Cerulli Assoc. in partnership with the Investments & Wealth Institute and the Financial Planning Association® (FPA®)
4. Source: Capgemini, “World Wealth Report 2019,” July 9, 2019, https://worldwealthreport.com.