To easily determine the professional style of a private client lawyer, financial advisors can ask them to describe their practices and what their role is with their high-net-worth clients. Rainmakers, for example, will usually explain that they rely on the knowledge and skills of their partners in addressing legal matters. Entrepreneurs, in contrast, will often talk about the close relationships they have with their ultra-wealthy clients and the fact that they are likely to be involved beyond traditional legal work.
Having determined the professional style of a private client lawyer, a financial advisor needs to build a business connection to create a strategic partnership.
The Economic Glue
Financial advisors then need to provide the economic glue that cements the business relationships with private client lawyers. They can do that in a number of ways. First, let’s first address what doesn’t work:
• Sharing revenue: In almost all situations, private client lawyers cannot share investment management fees. Also, it’s very unlikely for them to share commissions.
• Trading wealthy clients: One-for-one trading of wealthy clients between financial advisors and private client lawyers is rarely possible beyond a handful of clients at most. This doesn’t mean financial advisors should not refer business to private client lawyers, but such an approach is limiting in creating strategic partnerships.
Other approaches, meanwhile, have proved more effective in the field:
• Give private client lawyers a steady stream of ideas, concepts and strategies: By making lawyers aware of the solutions they can deliver to their high-net-worth clients, financial advisors are likely to be on the top of the lawyers’ minds when client opportunities arise.
There are two basic ways to deliver cutting-edge content. One way is for financial advisors to develop the material. This might entail doing primary research or intricate concept expansion. An equally effective but much simpler approach is to curate insights and distribute them to the private client lawyers.
• Help them generate more business from their high-net-worth clients: A small but significant investment-based advanced planning solution can be beneficial to all parties—the wealthy investor, the private client lawyers and the financial advisor.
For instance, advisors can show their expertise with things such as charitable instruments, including trusts and private foundations, or captive insurance companies. Private placement life insurance in particular has become increasingly appealing to wealthier investors.
Different professional styles require different approaches. Entrepreneurs, for instance, are very interested in your ability to effectively use project and retainer fees. Rainmakers like any viable ideas leading to improved networking.
Entrepreneurs are looking for concepts and strategies that address legal matters and non-legal matters such as concierge medicine.
Rainmakers are often seeking creative ways to communicate legal solutions, including products that can produce legal fees. Technicians are many times attracted to new concepts with the potential to get into the nuances.
The way you frame it is important. Consider private placement life insurance. For entrepreneurs, this type of insurance allows you to address a keen interest of the ultra-wealthy, which is investment-related tax mitigation—and that’s often the attraction as this can translate into a closer advisory relationship. Rainmakers, in contrast, find this type of insurance to be an efficacious way to create new potential opportunities for legal work. Technicians recognize it as something that allows them to be proficient and show off the requisite expertise.
If you can help private client lawyers generate more revenues for their existing high-net-worth clients, that’s a powerful way to fairly rapidly increase referrals and your own assets under management for financial advisors.
Russ Alan Prince is president of R.A. Prince & Associates.
Brett Van Bortel is director of consulting services for Invesco Consulting.