Elite advisors use techniques that could be adopted by many others in the field.

Note: This is the first in a series of articles examining the characteristics of advisors who earned a minimum of $1 million per year in each of the past three years.

    Every profession can be viewed as a pyramid, and the advisory business is no different. The base of the structure is the majority of professionals: individuals who offer the same goods and services as their colleagues, don't distinguish themselves from other similar practitioners and are moderately successful. Further up the food chain is a smaller, more influential group that has more refined skills and is comparatively more successful. And finally, there is the very small group comprising the tip of the pyramid-those individuals who are the leaders in their field, work with the most enviable clients and make the most money.
    A common dilemma for most advisors in the bottom two categories-and their management-is understanding how to best refashion their businesses to be more successful and move up the pyramid. To help ambitious advisors create a game plan, we undertook an in-depth review of the most highly regarded practitioners to isolate the characteristics that contributed to success.
    Last year we amassed data from those advisors who had earned at least $1 million in income (not production) in each of the past three years. The advisors represented in our data included financial planners, insurance agents, RIAs, bankers and brokers who derived most of their income from a fee or commission on the sale of products, rather than a fee for services. By requiring three years of W-2 income from each of the study participants-and requiring team members to verify individual income levels-we were able to eliminate those advisors who had not achieved a consistent earning pattern. In total, approximately 1,200 advisors fit our definition; we call them the Elite 1200.
    At first blush, there are obvious differences between the Elite 1200 and the balance of the financial advisory universe. But perhaps more striking is that none of the Elite 1200 are unique-they sell the same products and services as their peers, their processes can be duplicated and often are, and they communicate with their clients using the same methods as everyone else in their field. Given these facts, we believe that advisors who are not yet operating at the top of their game and are willing to work hard, both in and on their practices, can reach Elite 1200 status.
    A number of criteria separate the Elite 1200 from their advisory colleagues, and we have isolated the three elements that contribute most significantly to an Elite 1200 advisor's earning ability. These characteristics alone will not ensure specific income levels, but these skills will contribute to any advisor's overall preparedness and effectiveness as a provider to the wealthy:
        Consistently sourcing affluent prospects.
        Cultivating loyal clients.
        Financially maximizing relationships.
The balance of this column will examine the methods of the Elite 1200 in effectively identifying and converting wealthy clients. The other two criteria will be explored in greater detail in upcoming columns.

Finding, Converting Wealthy Clients
    Our research has consistently shown that the number one concern of advisors is accessing prospective affluent clients. Any prospecting strategy can conceivably result in desirable clients, but some techniques have proven to be more effective than others. Consider the following.
    Our research with top advisors indicates that referrals are their best source of wealthy clients.
    Our research with high-net-worth investors shows they find their primary financial advisors through referrals from friends or family members with similar financial means, and professionals, such as accountants and other advisors. Advisors are confident in their ability to cultivate relationships with wealthy individuals if given the right access. Nearly 100% of survey respondents believe they can convert an investor with $10 million in liquid assets into a client if that investor was referred by a trusted source.
    And the final technique: how you have successfully sourced new clients, especially affluent ones, and how you found your best new client within the past year. More often than not, the answer will be a referral.
    The consensus tends to be that referrals are the best method of finding new affluent clients. The circumstances surrounding a referral greatly increase the comfort level of both parties. And, in turn, that comfort increases the likelihood that a productive business relationship can develop between the two. Logic dictates that an advisor can create a pipeline of receptive affluent prospects by simply replicating the conditions described above.
    However, not all types of referrals are alike. Our research shows that quality referrals come from two principal sources: current clients and centers-of-influence, or those professionals or organizations that wealthy individuals rely on for advice, guidance and services. Most financial advisors cite existing clients as the best source of new clients. But we believe that existing clients are a limited resource, especially if your goal is to attract and work with individuals and households with a net worth of $5 million or more. Why? Because most wealthy people only know a handful of other people with similar or greater private wealth, and frequently wealthy individuals do not want to disclose the details of their finances that may be required to make an advisory referral. The Elite 1200 have already figured this out and, while they certainly make use of client referrals, it is not their primary gateway to new affluent clients. They do, however, rely heavily on centers-of-influence for high-quality referrals. In fact, a defining characteristic of the Elite 1200 is the ability to find a constant stream of interested, motivated and wealthy clients through other professionals.
    Centers-of-influence can include a wide range of professionals and organizations. It's important to know that private client lawyers and accountants are the most persuasive and consistently productive sources for referrals. Others include divorce attorneys, executive coaches, tax specialists, estate planners and personal security consultants. However, any advisor with complementary services, a wealthy client base and the ability to share revenue is a potential center-of-influence.

Strategic Partnerships
    Most advisors working with centers-of-influence do so through a loosely structured strategic alliance. By contrast, the Elite 1200 form strategic partnerships to accomplish the same thing and get better results. (See chart.)
    Strategic alliances will certainly produce desirable referrals, but they are sporadic and often unqualified. This is because the center-of-influence is not motivated to refer business; may not have enough experience with a particular advisor to feel comfortable referring their best, largest or most complex clients; and can turn to other advisors for similar expertise.
    Partnerships, however, connote a more formal relationship between the advisor and the center-of-influence and a shared business philosophy. The advisor is the preferred or exclusive expert and will receive the bulk of the referrals made by the professional, and both have an interest in mutual success and are always scanning for referral opportunities. This results is an ongoing list of wealthy clients who are appropriately profiled and prepared to interact with an advisor.
    Most strategic partners do not share revenue-to do so requires proper licenses and agreements. Nor do they operate on a quid pro quo basis-each party expecting a referral or a client in exchange for something similar. As mentioned previously, these partnerships are based on a high degree of trust between professionals and are about long-term business vision, a shared philosophy and a commitment to delivering comprehensive client service.
    In summation, it bears repeating that only 1,200 U.S. advisors regularly earn more than $1 million on an annual basis. But, with careful analysis, it is clear that these practitioners are not alchemists transmuting lead into gold, nor are they in possession of unique, unattainable skills. In fact, the Elite 1200 rely on characteristics and techniques that can be adopted and refined by a great number of advisors.

Hannah Shaw Grove is the author of five books on private wealth and advisory practice management. Russ Alan Prince is president of Prince & Associates.