What financial advisors need to know to serve high-net-worth clients

Advisors wishing to attract high-net-worth (HNW) clients to their financial practices need a special set of skills to serve this demanding and highly sought after market. We talked to three top financial professionals who shared their advice on what a financial advisor needs to know to serve high-net-worth clients.

While the foundational services needed by high-net-worth (HNW) clients are similar to those of other consumers, said Graydon Harder, director, individual solutions marketing, Securian Financial, there are additional services unique to the wealthy.

These foundational services include:

• Understanding and implementing a protection plan, such as life insurance and long-term care protection
• Developing a strategy for how to set aside income and assets not needed for current expenses
• Understanding how they will manage the transition from working years to retirement
• Considering and organizing their legacy

Beyond these basic financial services, said Harder, the needs of wealthy clients will quickly become very individualized to their unique situations, values and goals. “HNW individuals are much more likely to need more sophisticated services relating to their investment portfolio, and they are also more likely to own assets that produce income, such as business interests, which may not be easy to liquidate or exit.

With the upcoming changes in estate-tax rates and the lifetime exemption, more Americans are going to have to come to grips with how to limit their estate- tax exposure, Harder said. HNW individuals are also more likely to employ charitable-giving strategies to accomplish their goals.

Attracting high-net-worth clients

So what can advisors do to win the hearts and minds of HNW consumers? The needs of high-net-worth clients are widely varied and commonly require a broad spectrum of tools and strategies – especially legal and tax advice that most financial advisors can’t provide themselves, Harder said.

So it stands to reason that the financial advisor might be a coordinator and driver of designing and/or implementing these plans. It really requires a team of professionals to successfully execute such a plan. “Organizing and facilitating this process can be a huge task itself, and often the financial services professional is uniquely situated to help guide the process and maintain the working relationship with the HNW individual ,” Harder said.

High-net-worth (HNW) clients are usually looking for peace of mind and simplicity, advised Elke Rubach, MDRT member and principal at Rubach Wealth. “They need to know that they can count on you,” she said. “The best strategy is to learn to listen to what they're saying and be a resource for them.

There’s no shortage of different products to be sold, but unless you have the client's trust, they’ll be very reluctant to move forward. Even if they’re interested in moving forward, if you’re solely product driven, another advisor who provides more support may replace you.”

A vast majority of high-net-worth clients want to know that their families will be OK in times of turbulence, or in the absence of the breadwinner or breadwinners, Rubach said. It's not just ensuring that there will be enough money for the next generation, but that the next generation will be able to manage the wealth according to the family's values, as well.

“Clients want to know that you will be there for them; so, establishing a relationship with a spouse, the grandparents and the children is very important – providing clarity and peace of mind will go a long way,” she said.

It’s important never to treat two families alike, Rubach added. Every subtlety is considered when building their programs. “If you compare a family to an industry standard or rule of thumb, you’re failing to customize the plan to the family’s needs and preferences. You start with a plan, and then move on to product discussion if there is a need. Be resourceful and take a 360 view of the family’s individual situations,” she said.

Helping HNW clients gain confidence

Michelle Hoesly, Top of the Table MDRT member and president of Resource I, said that her firm helps high-net-worth clients find confidence in knowing that someone is helping them with their finances. They look for financial professionals who are smart, agile, and who can handle their needs without much input, she said. It is important for clients to know they can reach out to their financial professionals for guidance during market fluctuations and financial events, such as the recent developments in the banking industry.

“Being available for clients, with notes on their investments and diversification during such events, can help provide comfort to, and thus retain high- net- worth clients,” she said.

Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at [email protected]. 

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