Advisors need to start thinking about two asset classes that have been missing in their work with clients: time and social capital.
Time is a precious asset to ultra-high-net-worth individuals. Many advisors claim that their goal is to be a trusted advisor to their clients. But to accomplish this, advisors need to gain a deep understanding of their clients, and they need to do it in a way that doesn't waste their clients' time. Some industry experts say advisors should take a systematic approach, focusing on a client's intellectual capital (what they have achieved in their career), philanthropic capital, human capital (family and how they pass their values to the next generation) and financial capital (their money).
In a recent survey of wealthy individuals by SEI, only 25% of respondents said their financial advisor had a complete 360-degree view of their lives and goals. Two-thirds said they believe advisors need to understand all their goals to plan effectively. Advisors may argue they do in fact know their clients, or that not all clients are forthcoming about themselves. But many clients perceive that their advisors don't know them well enough and, as we all know, perception is reality.
If you are an advisor with a role in business development or client relationship management, you should view yourself as a type of social anthropologist or client excavator-someone who seeks to know all parts of a client for the purpose of being the best fiduciary. Effective wealth planning means understanding life goals, and understanding life goals means understanding your client's life, history and everything that makes him or her unique.
Time Efficiency
The process of building trust with clients should start before you even meet them. Start by creating a list of important questions you want to ask before the initial client meeting. The questions should serve as a foundation, helping you understand who the client is and what type of planning he or she needs. Walking into a meeting prepared also shows clients you're passionate about what you do and care about their needs.
Some advisors will say, "I don't want to scare them by knowing too much." But intelligent and insightful questioning of clients should have the opposite effect by engendering trust and respect.
Good preparation also helps focus the client meeting and prevents it from becoming too time-consuming. Winston Churchill once quipped, "If you want me to speak for an hour-give me a moment's notice; if you want me to speak for half an hour, give me a day's notice; if you want me to speak for five minutes-give me a week." The underlying message here is that being concise and to the point takes work.
Many advisors go into a prospect meeting and speak for hours because they did not prepare. By walking into a meeting with carefully prepared questions, you underscore that you respect your prospects' time and you give them a taste of how you are going to steward their time as clients.
We have found that the more relationship managers know about the client, the more confident they are in engaging the client about non-financial topics, such as hobbies and passions. Having such a broad dialogue with clients leads to lasting relationships, as well as an increase in your wallet share. Having a deep understanding of your client also allows you to be a good steward over another key asset: your client's social capital.
Social Capital
Hannah Grove and I have previously written about how new client acquisition in the ultra-high-net-worth marketplace is primarily driven by referrals from two sources: existing clients and centers of influence. At its core, growing your ultra-high-net-worth business is about getting better referrals and increasing your success rates with a proactive strategy. Waiting for the prospect to call is a recipe for failure.