High-Net-Worth Investors: the Financial Advisor’s Full-Size Candy Bar

Anyone who’s ever gone trick-or-treating on Halloween knows that the fun-size candy bars are fine, but the full-size versions are the holy grail. 

When I was a kid, my parents would drop me off at my best friend’s much bigger house in her much wealthier neighborhood to go trick-or-treating. She knew exactly which houses handed out the coveted full-size Hershey’s, Snickers, and Three Musketeers, and, dressed like Barbies or 2/5 of the Spice Girls, we would map out our route strategically to make sure we hit them all.

We did a lot of silly, stupid things as kids. This was not one of them.

High-net-worth (HNW) investors are to advisors what full-size candy bars are to kids on Halloween. They’re highly sought after, and they’re not easy to find. So if you want to add HNW investors to your book of business like we wanted to add gigantic Milky Ways to our impending sugar coma, you need to think like kids on Halloween: strategically. (But you can probably skip the costumes.)

Develop a Plan

You can’t just decide you want to recruit HNW investors. To get them in the door — and keep them there — you need a specific plan that includes serving their specific needs, which are different from and more complex than those of mass affluent investors. And if your typical service offering is straightforward investment management, it may be time to expand.

HNW investors often require estate planning assistance, tax-driven investment strategies, philanthropic planning, and customized wealth management that includes non-traditional assets*. Adding these services to your firm’s catalog can help you set yourself apart from other advisors hunting the same HNW investors. 

Be Efficient

Recruiting new clients takes time. Recruiting HNW investors takes even more time. To do it effectively, the rest of your business needs to run smoothly without much heavy lifting on your part. Manual spreadsheets and tedious workflows have no place in a firm that’s attempting to attract and retain HNW clients. 

Consider your back office: does it make sense to maintain those operations in house, or would outsourcing actually be more efficient and cost effective? Robust technology that supports or automates advisor tedium — reporting, billing, and portfolio management — frees up time you could be spending on services that matter to HNW investors.

Target Them 

To attract HNW investors, you need to know what they value. Philanthropy is a top priority for HNW investors, and education is the most popular philanthropic cause among HNW investors, followed by health**. Think about attending university fundraisers and charity events focused on education and healthcare.

And as new generations of HNW investors emerge — particularly those who have inherited money from their parents — they’re going to need financial advisors. In fact, 66% of children fire their parents’ financial advisors. That’s bad news for them, but good news for advisors looking to start adding HNW investors to their book of business. 

If you want to focus on emerging HNW investors, take a look at your social and digital presence, as well as your ESG service offerings: 95% of affluent millennials prefer to make investments that have a positive impact on the environment***.

Be Patient

Understand that HNW investors aren’t going to flock to your door overnight — and that’s okay. Implementing the changes in your business necessary to attract AND retain HNW investors takes time. The upfront investment in improving your messaging, your technology, and your services could pay off in the long run.

And don’t lose sight of the value of serving your current clients. Creating advocates for your business creates referrals, and those referrals could include HNW individuals.

Think Value, not Price

HNW investors demand quality from their advisors — and they’re willing to pay for it. According to World Wealth Report 2017, investment management and financial planning are the top two services HNW investors value. And while you probably already offer those services, it’s important to understand that HNW investors typically want their money managed in specific, nuanced ways that include opportunity, customization, and flexibility.

Separately Managed Accounts, or SMAs, are investment accounts highly tailored to the individual investor, giving them the ability to own individual stocks and bonds in conjunction with other investment vehicles. An SMA usually involves three parties: investor, advisor, and third-party money manager(s). 

While SMAs notoriously have higher management costs and higher investment minimums than other investment strategies, they also allow investors more control over the investment experience, offer direct access to the money manager, and enhance tax management capabilities — benefits that HNW investors typically value.  

Attracting HNW investors to your business takes time — but that time has the potential to pay off royally with greater AUM and more revenue across fewer accounts. To find out how separately managed accounts could help you attract and serve these sought-after clients, check out our complete guide to SMAs.



*“How to Attract and Retain High Net Worth Clients | Wealth ….” 25 May. 2017, https://www.wealthmanagement.com/high-net-worth/how-attract-and-retain-high-net-worth-clients

**“5 Tips for Attracting UHNW Clients – The Advisor Coach.” https://www.theadvisorcoach.com/5-tips-for-attracting-uhnw-clients.html

***“How Millennials Are Changing The Future Of … – Forbes.” 2 Apr. 2019, https://www.forbes.com/sites/forbesfinancecouncil/2019/04/02/how-millennials-are-changing-the-future-of-investment/