Most professionals working with the exceptionally wealthy are looking to grow their clientele. Every time we survey professionals about their key concerns, acquiring new and wealthier clients is religiously at the top of the list. That's why I'm occasionally astounded by the complete idiocy of some professionals when it comes to finding and working with the financial elite.
Let's say you put a lot of money, time and serious effort into a marketing program that resulted in you being introduced to a number of extremely wealthy prospects that are motivated to work with you. What would you do? My guess-and I don't know who is reading this article but I'm presuming you have an IQ above 50-is that you would take advantage of what your marketing program reaped and do everything in your power to close these very wealthy prospects. However, the advisory industry, like the world over, has its share of absolute idiots.
Take, for example, the investment advisor who developed and implemented a very sophisticated and far-reaching marketing program that resulted in some very impressive referrals-exceptionally wealthy referrals. He became so enamored by the marketing program, in fact, that he was quite confused about his role and the way he makes a living.
This perplexity showed itself when a prospect from Tennessee contacted him about investing his newfound wealth. The Tennessean made his money by buying up farmland across three states after spending most of his life as a hard-working farmer. Not that long ago, oil and natural gas were found on some of his land, earning him a fortune after he sold the property and mineral rights.
The investment advisor set up a phone call with the Tennessean, but the call didn't go well. The advisor said the Tennessean was not his "ideal client." He was a "good old boy" who was not refined enough to measure up as a client. To drive home this point, the advisor told me that the Tennessean didn't have the first idea of what constitutes a quality wine. The advisor offered additional proof of how uncouth the Tennessean was, but I stopped paying attention after the wine anecdote.
The Tennessean wanted the investment advisor to manage a portion of his liquid assets as well as help him evaluate his estate plan. During the phone call, the advisor discovered that the Tennessean has term life insurance that might no longer be in force. The phone call ended when the advisor told the Tennessean that he doesn't do business with "Jed Clampetts."
Before the phone call, we conducted a preliminary investigation of the Tennessean. Unlike the "real" Jed Clampett, who, according to the Forbes list of wealthy fictional characters, is worth $6.6 billion, the Tennessean is only worth between $400 million and $500 million. A large percentage of his wealth is liquid.
The investment advisor and I discussed the phone call. I advocated doing business with the Tennessean and seeing how the relationship evolves. The advisor was strongly against that approach. He didn't feel there was a "deep connection" with the Tennessean, which he based on the one phone call. The investment advisor didn't feel he would be able to establish the type of friendly, high-class relationship he considers essential for the growth of his business. When I confronted him and explained that one phone call, good or bad, isn't enough to make a definitive decision, he became very distraught and for an entire week gave me the silent treatment. Mind you, if the advisor ended up with, let's say, $200 million to invest, it would put the Tennessean in the top five of his largest client accounts.
About two weeks later things started to get really bizarre. The rejected Tennessean desperately wanted to work with the investment advisor. So much so that he started harassing the advisor, promising to let him manage all his money. Just about every time the advisor received a call or e-mail from the Tennessean, he went off on an obscene rant about his right to pick the people he will work with. So, the investment advisor concluded that the only way to put the Tennessean in his place was to get a restraining order.