How financial advisors win high net worth clients ꟾ BlackRock

Given the intricacies of their finances and high tax rates, high net worth clients value personalized services like charitable planning, intergenerational wealth planning and trust services, as well as unique tax-efficient strategies such as gifting through 529 plans for both education and retirement. Given the complexities of tax planning, it is the most outsourced service among high net worth practices (40%), although many large advisory firms have added in-house tax professionals.¹

High net worth advisors center their investment management services around optimizing after-tax returns. They provide clients with personalized portfolios that employ innovative strategies such as direct indexing, alternative investments, private markets and option overlays, as well as customized exposures for clients who wish to express their personal values.

As constructing individual portfolios for every client can be very time-consuming, high net worth advisors often use separately managed accounts (SMAs) to deliver personalized portfolios at scale. This approach allows advisors to spend more time interacting with clients and providing high-touch services that deepen loyalty and drive referrals. Financial industry analytics firm Cerulli predicts that as the high net worth client demographic continues to grow at a faster rate than lower wealth tiers, advisors will increasingly adopt SMAs to streamline their investment process.¹

Personalize your service model

If you want to attract high net worth or ultra high net worth clients (and retain the ones you have), you may need to adjust your menu of services. Start with your ideal client – the one you wish all of your clients were like. They are both profitable and a pleasure to work with. You likely have a few who fit the profile. Discuss your service offerings with each of these clients, preferably during family meetings as this allows you to hear from both your current clients as well as their spouses and children.

Present each family member with a list of the services you currently offer and ask them to individually rank the value of each service and rate how well you deliver them. When you regroup, discuss the rankings to better understand each client’s rationale. Next, review the ratings and seek deeper feedback by asking questions like “Why a 9 and not a 10? Or why a 10 and not a 9?” This can help you uncover ways to improve your services and identify what you are doing particularly well. Additionally, ask if there are services you have not been providing that would be valuable to them. Refer to a checklist of potential offerings to help guide this conversation.

Once you have collected feedback from several of your ideal clients and their families, reflect on the insights you gleaned. Do you need to improve your existing services? Do you need to add new ones? Revisit your service model with a focus on enhancing your value to the type of clients you most wish to serve. Consider discontinuing any services that your ideal clients ranked low in value so you can reallocate resources where they count the most.

Before adding a new service, carefully assess the market opportunity and the cost of providing the service so you can reasonably project its profitability. You may need to hire new team members or even acquire another firm to access the expertise you need to deliver the service effectively. If you already have the expertise, how will you reallocate your time in order to provide the new service? How will the additional service affect bandwidth within your team?

Consider how you can scale the new service or create capacity for it by streamlining or eliminating activities that are less valuable to your business growth. For example, in order to provide personalized portfolios to your high net worth clients, you might streamline your investment process for the rest of your clients by using models.

Advisory practices that offer personalization at scale have higher revenue stability and higher valuations for mergers and acquisitions, which will be critical should you wish to acquire another practice or sell yours at some point in the future.

Build a team with diverse expertise

High net worth clients expect their advisors to possess deep expertise. Thus, teams comprised of various specialists can be more effective in serving their clients’ unique needs. Among RIAs managing assets of $500 million or more, 68% have specialized teams, enabling these firms to offer more sophisticated, personalized services than RIAs of the same size that do not have specialists.

Teams with specialists can offer more personalized services
% of practices offering personalized services