Cultivating Ultra-Affluent Investors

The population of ultra-affluent investors (those with $10 million or more in investable assets) is increasing at a greater rate than other wealth levels. This is creating a huge pool of investable assets held by those who are likely to rely on professional money managers. More advisors, meanwhile, are looking to find these investors.

But even though advisors are looking at a huge opportunity to increase their assets under management by cultivating the ultra-affluent, relatively few are getting much traction with this segment.

One problem is that they must know the difference between promoting a product and solving a problem. Which means they must know the difference between investment management and wealth management.

Those advisors focusing on investments will boast far fewer opportunities than wealth managers to connect with these investors. This doesn’t mean they can’t build large practices. But it’s considerably harder to find ultra-wealthy investors in the market for investment professionals. Wealth management, on the other hand, encompasses both investment management and wealth planning, and financial advisors practicing it can help solve a plethora of ultra-affluent investor issues and concerns.

Understanding Wealth Planning

The tools and techniques of wealth planning range from the basic to the cutting edge, and wealth planners are knowledgeable and adept with a wide array of legal strategies and financial products, including trusts, partnerships and life insurance.

As the field becomes more complex, a number of specialties have emerged within the world of wealth planning:

Income tax planning: This involves lowering the taxes on monies investors have derived from working and is of particular interest in light of the new tax law. By adroitly navigating the tax code, advisors can take advantage of periodic opportunities to restructure clients’ arrangements and thus lower their income taxes.

Some hyper-successful entrepreneurs, for example, can legitimately restructure their corporate entities to blunt their income taxes. These strategies can be either very basic or esoteric and require the use of hedging and sophisticated investment techniques.