In the past, many professionals failed to think beyond their own expertise when they were working with the affluent, and so they spoke extensively—if not exclusively—about investment performance.

Fast-forward to today; the situation is somewhat better, but only somewhat. Many professionals have adopted a more holistic wealth management approach, and they address a number of service areas, not just one. Even when they can’t, they know to bring other experts to the table.

But because of their compensation models, many financial advisors are focused on delivering services where they are paid. Such an approach often does a disservice to the affluent and proves to be unproductive for the professionals.

The better solution is for financial advisors to deliver to the wealthy what they want. And what they want are the solutions.

Results, Not Means Matter
Let’s put this all in perspective. The wealthy largely do not want:

• Investment management.

• Estate planning.

• Asset protection planning.

• Tax advice.

• Wealth enhancement strategies.

These are the means, not the solutions. In broad terms, here are the solutions they do want:

• A return on their money over a time that will enable them to address an array of personal/family needs and wants.

• The comfort in knowing that their children are going to receive their wealth as tax efficiently as possible within the parameters that they have determined are appropriate.

• To be confident that their hard earned wealth is not “stolen” from them by frivolous and irresponsible lawsuits.

• Ways to pay the least amount in taxes with the comfort that they are well within the legal and moral framework.

• Strategies to increase their wealth that are all governmentally sanctioned transactions.

The wealthy are looking for answers and ways to better their financial lives. But financial advisors and other professionals are so wrapped up in their own communities of expertise that they fail to connect the dots for the affluent client and are thus unable to deliver their expertise in effective ways.

It’s as if somebody is asking you the time and you tell him how the watch works.

Language Matters
In order for professionals to provide solutions, they must communicate the expected results of their services in a manner that resonates with their affluent clients. We have found in extensive studies of the wealthy that this is the exception as opposed to the norm.

Take, for example, an accounting firm that picked up a new client—a first round NBA draft pick. After the client was signed up, an accountant went through all the types of tax work the firm would be doing for the basketball player. Five minutes after that conversation, the accounting firm was fired. The accountant, in talking to the newly minted NBA player and his parents, was barking instructions and rules of the tax code.
This made the family feel extremely nervous. It actually reminded them of an encounter they had once had with police.

Accountants aren’t the only ones who have trouble communicating with clients. The worst offenders tend to be lawyers.

An intentionally defective trust, for instance, is a wonderful planning strategy. But why would lawyers explain to affluent clients that they are going to use an intentionally defective trust? Wouldn’t it be so much easier and better for everyone to simply say that they are putting the business into a trust without having to get so precise?

Then we have the likes of rabbi trusts and Crummey powers, which are important but don’t necessarily have to be discussed in detail or by name with clients. One exceptionally wealthy individual was completely against using a rabbi trust. As a Southern Baptist, he wanted a good “minister trust” instead. As it turned out, this issue completely derailed the estate planning process and the law firm handling the client’s personal and corporate work was eventually fired.

We also know of a time a multi-family office brought in a trusts and estates lawyer and an insurance agent to talk to one of its exceedingly wealthy TV personality clients. The affluent client is unmarried and without kids, but expects to one day get married and have a family. In recommending a large life insurance policy for any future spouse, the lawyer used a legal term, “floating spouse provision.” The client didn’t understand the legalese. The lawyer didn’t understand how harsh it sounded. It gave the would-be client an image of his spouse floating face down dead in a swimming pool. No one got any business from him.

Sometimes it’s better when trying to land clients to keep explanations clear and avoid unnecessary details.

The wealthy want solutions, but they also want to understand the solutions. Financial advisors and other professionals who want to work with the wealthy need to stop thinking in terms of the services they offer—they must not trip themselves up by “pitching” their processes and methodologies. And they must not stumble by falling on the crutch that is industry jargon.

Russ Alan Prince is president of R.A. Prince & Associates Inc. and executive director of Private Wealth magazine.

Brett Van Bortel is director of consulting services for Invesco Consulting, the sales consulting group within Invesco Distributions Inc. The opinions expressed are those of Russ Alan Prince and Brett Van Bortel, and are based on current market conditions and subject to change without notice. These opinions may differ from those of other Invesco investment professionals.