The amount of uncertainty today—politically, economically and socially—is virtually overwhelming to many high-net-worth individuals and families. In that environment, the affluent want leaders—professionals who will show them the way through the confusion.
The bad news: You can’t provide the level of leadership they want if you just offer investment management.
Here’s the good news: If you go beyond investments and deliver value in other, advanced areas of the affluent’s financial lives, you’ll position yourself to capture more than your fair share of ideal clients.
With that in mind, here’s a look at a crucial and fundamental component of true wealth management—advanced planning—and how you can use it to attract and serve wealthy clients in today’s volatile world.
Set Yourself Apart With Advanced Planning
Nearly every type of financial advisor offers some sort of financial planning along with investment management. But it’s tough to compete if you offer essentially the same services as most other financial advisors.
Affluent clients want more than just a financial plan, and they need help with more than just their investments. They want advanced planning—assistance with their entire range of financial concerns. Such concerns include tax mitigation, wealth protection, transferring assets to heirs and charitable giving. For example, according to CEG Insights research:
• 93% of affluent investors want advice about wealth transfer.
• 89% want tax planning advice.
• 76% want help with life insurance.
But here’s the thing: No one person can be an expert in the entire range of advanced planning needs and solutions. To provide advanced planning to your affluent clients—and to differentiate yourself from the legions of other financial advisors—you need help.
Specifically, you need a network of professionals—authorities with deep knowledge across the entire range of financial and legal specialties.
When Other Experts Are Needed
Ultimately, advanced planning is driven by just two things:
1. What your affluent clients need today
2. What might be critical to them moving forward
Given that, here are just a few examples of situations in which advanced planning solutions are often called for:
• Estate plans. Do any of your affluent clients have estate plans that are older than five years? If so, you need a trusts and estates attorney in your network.
• Life insurance issues. Have any of your clients experienced growth in their net worth since they purchased life insurance policies? If so, you probably need a life insurance specialist on your team.
• Charitable inclination. Do any of your clients have a strong philanthropic drive, but currently do only haphazard “checkbook giving”? A trusts and estates lawyers, and possibly an income tax specialist, may be of assistance here.
• Business for sale. Are clients planning to sell their businesses in the near future? That could call for the services of a valuation specialist and an investment banker.
• Concentrated stock positions. Clients with concentrated positions may benefit from the help of a derivatives specialist.
• High-value artwork. Clients with valuable art may benefit from the services of a valuation specialist and an insurance specialist.
Types Of Professionals To Work With
Advisors can usually address the majority of affluent clients’ advanced planning needs with four core professionals: a wealth manager (the advisors themselves, of course), a private client lawyer, an accountant and an insurance specialist.
1. Wealth manager. As the wealth manager, you will be the general manager of a team of professionals. That means you have three primary roles:
• Select qualified professionals for the network.
• Facilitate meetings with those professionals to provide a deep understanding of clients, and then draw out optimal recommendations to address the needs.
• Manage the network continuously so it serves the best interests of clients and all network members.
2. The private client lawyer. This key network member addresses tax, estate planning and legal needs—all of which are critical areas of concern for affluent investors.
3. The accountant. While the private client lawyer will provide the big-picture perspective on tax planning, the accountant typically will bring a much more detailed, day-to-day knowledge of income and other taxes. Any accountant you work with should be able to make specific recommendations to mitigate those taxes.
4. The life insurance specialist. An insurance specialist will work closely with a private client lawyer to identify and structure solutions that leverage the entire range of insurance products. You want a true independent here—not someone who is an agent for primarily one company.
Conclusion
The affluent want to work with leaders who can help them steer the ship through volatile times. That can’t happen with investment management advice alone. By committing to deliver advanced planning—and building a team of professionals to help you deliver it—you will differentiate yourself from everyone else who doesn’t take this path and move toward becoming the go-to advisor to the affluent.
John J. Bowen Jr. is CEO of CEG Worldwide and CEG Insights. Join the "Play to Win" consultation; it's your guide to wealth management success. Capture high-net-worth clients, move upmarket, unlock your potential now!