5 Keys to Managing High-Net-Worth Clients

Ready to level up your practice? High-net-worth individuals can be game-changing clients for financial advisors. These clients are typically investors with large estates or complex accounts that need a broad range of financial services. Attracting and retaining wealthy investors can make it easier to create recurring income. Plus, HNW clients tend to stay with their advisors for long-term relationships and often have solid networks for referrals.

With the HNWI market segment poised to grow in population, it already outnumbers the mass affluent audience by 2.5x and dominates a sizeable chunk of the wealth pyramid.

However, HNW clients aren’t typically a group you target by mistake. This audience has unique challenges they need an advisor to address and high expectations for the level of service they receive.

If you want to attract HNW individuals, you’ll need to understand them. This blog covers five keys to managing the HNW client.

What is a HNW Client?

HNW clients are typically defined as accounts with over $1 million in liquid assets. This highly sought-after client category only accounts for 1.2% of the population, which makes finding a high-net-worth individual interested in joining your practice easier said than done. But they are certainly out there. The Capgemini World Wealth Report states more than 53 million individuals fall under the umbrella of high net worth, holding nearly $27 trillion in assets alone. 

And the dynamics of this market segment are changing. McKinsey reports that women are expected to control much of the wealth passed to the Baby Boomer generation by 2030.

HNW accounts are individuals or families with substantial assets and unique financial needs. They require sophisticated wealth management solutions, including comprehensive financial planning, tax optimization, estate planning, and investment strategies tailored to their risk tolerance and long-term goals. HNW clients often seek personalized and proactive service, demanding a high level of expertise and attention to detail. 

Targeting and serving HNWIs effectively can help you enhance your practice's revenue potential while establishing your reputation as a trusted advisor in the affluent market segment.

5 Keys to Managing High-Net-Worth Investment Advisors

How can your practice effectively target wealthy individuals and keep them satisfied? To help advisors answer that question, we’ve built a list of the top five keys to attracting, managing, and retaining HNW clients.

1. Focus on Value First, Discounts Second

There are some misconceptions about how the wealthy think about price. Some believe that affluent investors don’t think about how much they spend on products and services—they have so much money, why would they care? Others think that the wealthy tend to be penny-pinchers, always seeking out a bargain—how do you think they got wealthy in the first place?

These characterizations might apply to one end of the high-net-worth spectrum or the other, but they don’t hold true for this class of investor as a whole. A much more common characteristic of this investor category is their appreciation for value and cost-effectiveness.

The takeaway? Give your clients a great value, but don’t undercut your worth. Financial advisors sometimes go out of their way to offer discounted services or special rates in an effort to attract high-net-worth clients. However, McKinsey research shows that financial advisors who significantly underprice their services erode their perceived value to clients. As a result, they tend to have fewer high-net-worth clients and manage fewer assets with those they do attract.

Instead, financial advisors interested in managing high-net-worth clients’ assets should charge a fair price and drive home the value of what they’re doing.

Being communicative about plans and results, clarifying the impact you’ve had on their personal wealth, discussing challenges avoided, and highlighting opportunities seized are the things that attract and keep wealthy clients, not whether they’re paying one percentage or another in fees. Here are four values you can offer that go beyond your base price for services.

Client Feedback

By prioritizing frequent touchpoints and actively seeking client feedback, financial advisors can better understand and address the evolving needs of their high-net-worth (HNW) clients. Regular communication allows advisors to stay informed about changes in goals, risk tolerance, and preferences, enabling them to provide tailored recommendations and personalized solutions that align with their clients' objectives.

Performance Reporting

Offering more frequent performance reporting touchpoints provides HNW clients with valuable insights into their portfolios and investment product recommendations. By reviewing performance regularly, advisors can proactively identify opportunities for optimization or pivots based on market trends, changing economic conditions, or shifts in clients' financial goals. Transparent and detailed reporting builds trust and confidence, showcasing the advisor's expertise and commitment to achieving the client's long-term financial objectives.

White Glove Services

In addition to core advisory services, advisors can enhance the client experience by providing white-glove services that go beyond the typical offerings of other advisors. This can include personalized concierge assistance, facilitating access to exclusive events, providing exciting networking opportunities, or offering tailored solutions for complex financial situations. By delivering a high level of service and catering to the unique needs of HNW clients, advisors demonstrate their commitment to delivering exceptional value and creating a differentiated client experience.

Comprehensive Financial Planning

HNW clients often have complex financial situations that extend beyond simple investment management. Advisors can provide value by offering comprehensive financial planning services that encompass tax optimization strategies, estate planning expertise, philanthropic guidance, and specialized investment solutions. This holistic approach ensures that all aspects of the client's financial picture are considered and integrated into a cohesive plan, allowing the advisor to comprehensively address their clients' unique challenges and goals.

2. Be Patient

It’s important to be patient during the onboarding process, especially if you’re serving your first high-net-worth client. It may take time for you to gain insight into the full picture of your wealthy clients’ assets.

Simplify Your Onboarding Process

First, the wealthy simply have more assets to keep track of—naturally, the onboarding process is going to take more time. However, your HNW clients may not have a lot of patience for spending time on that process.

By streamlining your onboarding process, you show that you value your client’s time and have their best interest at heart. Make sure you use tools that integrate seamlessly and provide a user-friendly experience. Try to spend more time getting to know your client—including their fears and motivations—than you spend on paperwork and account setup.

Be a Team Player

Many times, advisors have been successful at playing quarterback of all trusted professionals, making sure that what is discussed is understood by all parties and that there are consistencies and accountability. You may not be an expert in all areas, but you can definitely manage the engagement and help make sure the client is best served by all parties.

When you have as many assets as high-net-worth individuals do, it’s totally reasonable to spread out the various aspects of your financial life to different experts. If your client is a business owner, they might have a company financial advisor, for instance. They might have a CPA who handles their taxes, an estate planner for their wealth transfer plan, an investment manager, and more. Don’t be caught off guard if you find yourself joining a team; you may not be the primary financial advisor for a HNW investment account. 

You might number amongst one of these specialized financial advisors, particularly if this is your first high-net-worth client. But often, high-net-worth clients also have a single advisor with insight into the full picture of their wealth. Having one central advisor that can keep high-net-worth individuals abreast of their overall financial well-being is prudent, even if that individual isn’t directly involved in the day-to-day management of the different elements of their wealth.

Prepare for a Marathon

If you want to be the primary (or central) advisor for your HNW client, you need to be highly trusted and develop a strong relationship with them. It can take some time for advisors who have just acquired their first high-net-wealth client to build that trust.

Understand that you are in it for the long haul. Most HNW clients stay with their advisors for years. Some advisors stay with the estate during (and even after) the point of succession. The way you build trust and showcase value is different when you realize you’re in it for the long haul.

3. Make the Time

Managing high-net-worth clients’ wealth is time consuming. Not only is there simply more to manage, but they’re too valuable to your practice to treat like any other customer.

Communicate Frequently (And Proactively!)

You’ll likely communicate with your high-net-worth clients more regularly and in greater depth. You’ll spend time thinking about their lives more and taking actions to demonstrate that you’re interested in their well-being. And if they call you at 3 AM with some crisis, you’ll wake up and get to work addressing it.

You can start off on the right foot by automating certain reports and updates so your clients don’t have to ask. Create an outreach strategy to help them stay in the loop and get valuable insights from your practice on a regular basis. Your communication strategy should even include a proactive approach to helping your clients feel reassured when prices drop or the market becomes volatile.

Focus on Client-Facing, Profit-Impacting Initiatives

Once you’ve onboarded your first high-net-worth client (and ideally before), take a hard look at your practice and look for where you can find efficiencies. Research shows, for example, that advisors who outsource their investment management save over 8 hours per week. 

Time saved with outsourcing can (and should) be applied to serving high-net-worth clients better.

“We now have the capacity to work with much larger accounts in a much more reliable and meaningful way.” - Advisor

Maybe your business processes are bottlenecked, and you need a practice management consultant to make an assessment. Or maybe you need help managing your tech stack. Hiring professionals to take care of the tasks that fall outside of your unique specialty is one way. Forming key partnerships and outsourcing those tasks to a reliable third-party provider is another.

You have a never-ending to-do list, but not all of those tasks hold the same weight or need your explicit involvement. Use the time saved to focus on initiatives that directly impact client sentiment or improve profitability.

Build a Prospect Pipeline

Natural decay occurs within every list of clients and contacts—over time, you are going to have some fall off for any number of reasons. To keep your business sustainable and strong, you need to invest in a proactive marketing strategy that keeps prospects flowing in. Your marketing strategy should center around your value proposition, telling a compelling story that targets your ideal clients.

Many financial advisors do their own marketing, but that could be done more efficiently when outsourced to a professional. You could also hire more junior staff to help manage your marketing strategy.

You should also include centers of influence (COI) in your outreach strategy to help strengthen your referrals. Not only can COIs send their clients your way when they need an advisor, but establishing a strong network of professionals will also help you provide valuable resources to your clients when they need services you don’t provide.

4. Take the Family Office Approach

Too often, advisors look at their point of contact as if they are the only stakeholder for the account. For HNW clients in particular, it’s important to realize you’re often working for the whole family, and limiting yourself to the primary account holder can be detrimental. You need to take a family office approach to help build connections with each member of the family beyond managing their investment needs.

Provide Broader Offerings

Many clients are looking for a kind of one-stop-shop when it comes to personal finance services and advice. Family offices provide the wealthy with an end-to-end service experience. 

Not only do these organizations facilitate every aspect of a wealthy family’s financial lives (like maintaining their savings accounts, tax planning, asset management, and budgeting strategies), but they also provide support in ancillary areas, like coordinating travel planning, conducting background checks for the clients’ staff personnel, property management, career planning, and more. They might even facilitate dog walking services.

Over the last three years, McKinsey reports a clear increase in clients’ preference to consolidate their private banking and wealth relationships to achieve convenience and better relationship deals. In particular, 53 percent of those aged under 45 and about 30 percent of those with $5 million to $10 million in investable assets prefer to consolidate relationships.

Becoming a family office obviously takes some work, but it gives you an incredible degree of stickiness. If your organization is helping manage your clients’ private wealth and financial assets while also supporting their lifestyle, property, travel, and more, dissatisfaction in any given area will be outweighed by the sheer utility you provide.

Provide Multi-Channel Support

For the HNW client, you want to meet them where they are. Make it easy for them to pick up the phone, send you an email, meet virtually, or schedule an appointment in your office for an in-person conversation.

According to McKinsey, around 40% of HNW clients say phone or video conferences are their preferred wealth management channels, and only 15% prefer going into branches for in-person visits. This evolved interest in digital and remote engagement is higher for HNW clients than the affluent class of investors.

50% of HNW clients think their advisor should improve their digital capabilities.

Most wealthy individuals value time and convenience. Stay on top of offering the tools and capabilities that best support your HNW clients.

Target (Current and Future) Key Players

As we discussed above, women are poised to make an unprecedented shift by 2030 and take a larger share of the estimated $30 trillion in assets for the Baby Boomer generation. Yet, Advisors often defer to the male as the decision-maker in the room. This can be a devastating mistake for today’s advisors.

According to one study, both male and female advisors looked at men more than 60% of the time when speaking with heterosexual couples. The findings noted wealth managers made an average of 10 miscues in a 30-minute meeting, such as expecting the men to be the financial decision-makers; indicating the couple’s finances were merged; assuming that women want direction; and expecting women to be more risk-averse and less knowledgeable than men. Male financial advisors are twice as likely to commit these miscues.

And, while women were less likely to complain about a poor experience with an advisor, 35% of women decided to switch after feeling disrespected or unheard.

But this isn’t limited to the female in the room—if advisors want to create long-term relationships with HNW estates, they need to earn the trust of the entire family. A big part of taking the family office approach means learning how to cater to and address each key player within the family. Building relationships now make it an easier transition later (when estate succession occurs) and increases the likelihood that the family will continue to turn to you as their financial expert.

5. Keep an Eye Out for a Niche You Can Fill

The be-everything, do-everything family office approach can certainly be rewarding, but it’s also challenging to establish and leaves little room for other projects. Some advisors may find it more appealing to position themselves as experts within a niche unique to the high-net-worth space. 

Managing high-net-worth clients’ assets isn’t just about managing more assets; it’s also about managing different kinds of assets and in different ways. Because there are simply fewer high-net-worth clients out there, there are also fewer advisors specializing in serving their unique needs.

You could, for example, specialize in executive compensation. What’s the most advantageous way for a company executive to structure their salary, their stock options, executive perks, deferred compensation, retirement packages, and so on? Finding an individual with the knowledge to answer that question isn’t easy.

Identifying and filling a niche that serves the unique needs of executives, business owners, and other individuals that make up this class of investors is an excellent way to attract them on an ongoing basis. Here are four examples of niche financial services you could offer.

Tax Strategies

Position yourself as an expert in maximizing tax incentives and advantages for HNW clients, including tax-efficient investment strategies, estate planning techniques, and business structures that minimize tax liabilities while preserving wealth.

Wealth Planning

Specialize in generational wealth transfer and comprehensive wealth planning, offering tailored strategies to address the unique challenges HNW clients face, such as minimizing estate taxes, teaching financial literacy, and cataloging collectibles. You might even help with managing credit cards and overseeing their bank accounts, structuring everything to optimize wealth preservation and growth.

Philanthropy

Become a trusted advisor in the realm of philanthropy, guiding HNW clients on charitable giving strategies, setting up charitable foundations or donor-advised funds, and leveraging tax advantages to align their wealth with their philanthropic goals.

Alternative Investments

Offer access to a diverse range of alternative investments—such as private equity, venture capital, real estate, hedge funds, or commodities—to provide HNW clients with opportunities to diversify their portfolios beyond traditional asset classes, potentially enhancing returns and managing risk. Help your HNW clients understand the complexities and potential benefits of alternative investments, providing education, due diligence, and research on various opportunities. 

These are just a few examples; you can also explore other niches, such as international wealth management, sustainable investing, cryptocurrency, or specialized services for specific industries like entertainment or sports. Some niche areas might even require certifications or accredited investors. Provide targeted expertise in a specialized niche to build a reputation as the go-to advisor for the community that needs those services.

Attract and Grow Your HNW Client Base

When applied consistently, these five keys make it more likely that you’ll attract and retain high-net-worth clients. That’s the goal, but it’s often easier said than done.

Managing high-net-worth clients requires a significant amount of time, focus, and resources. The more HNWI you onboard to your practice, the more important it becomes that you don’t skip over the third key in this article: make the time.

Scaling a financial advisory practice means delegating some tasks and outsourcing others when appropriate. With the right partner, you can benefit from significant time savings that translate into more time for your most valuable clients.

AssetMark provides an end-to-end turnkey solution that can support every aspect of your business. Talk to our team today to decide exactly how much of your business you should outsource and which tools will help you create a more efficient practice.