There are a number of things you have to get right in order to build a very successful, significant high-net-worth advisory practice, starting with having the requisite technical expertise. You must also have a profitable business model. Still, one of the biggest obstacles—if not THE biggest obstacle—to building a very successful significant high-net-worth advisory practice is your ability to bring on new wealthy clients. 

There are a wide variety of ways you can connect with the wealth. And there are anecdotes showing just about anything can work. This article shows what research proves works best.

What Works Best Today
There are three approaches to business development that research shows are consistently productive, including client referrals, client events and referrals from centers of influence (COIs). Additional approaches, such as social media, do indeed produce results but they prove to be much less successful. The viability of these other approaches might very well change in the future as the demographic composition of the wealthy changes. Nonetheless, at present, the three noted approaches are your best ways to connect with the wealthy.

The dynamics of the three approaches, as well as what is required to make them successful, are different. In understanding these differences, you are able to make smarter decisions on how to spend your time and resources.

Comparison of Approaches to Connecting with Wealthy Clients

Factor	Client Events	Client Referrals	COI Referrals
Effectiveness	Low	Medium	High
Likelihood of “preferred wealthy client”	Somewhat likely	Usually not likely	Very likely
Potential for new wealthy clients	Low but varies	Limited	Extensive
Ability to create a pipeline of new wealthy clients	Moderate	Low	High
Initial time to new business	Varies extensively	Unknowable	Low
Competition	High	Limited	Limited
Core operational requirements	High-quality content and presentations skills	Do a great job for clients	Add value to COI relationships

 

COI Referrals: According to Brett Van Bortel, director of consulting services with Invesco Global Consulting, “There is no question that the most effective approach to connecting with new, wealthy clients is referrals from COIs,” he said. “However, many financial advisors, as well as other types of professionals, have had difficulty cracking this code. They dabble, hit obstacles and set it aside due to some exigency. But they are missing out on the best way to grow their high-net-worth practices.”

It is going to usually take some time before new COIs will likely be making extensive referrals to you. They will have to get comfortable with you and strongly believe in your integrity and technical competence. However, there are ways to vastly accelerate this process. For example, when learning about the COI’s business model and self-interests, you can engage in funneling, which is a process where you can identify possibly clients for your expertise in the very first meeting.

“The essential key to being successful building a pipeline of new wealthy clients based on COI referrals is your ability to add value to these relationships. This is not about trading wealthy clients. There are systematic processes you can employ to understand what is important, and what is not, as well as the way the COI’s practice functions,” says Van Bortel. You can use these insights to identify ways to add meaningful value. Due to the Law of Reciprocity, by adding value to your COI relationships, you will likely be rewarded with wealthy clients who can benefit from your expertise.

Client Referrals: Without question, the way most financial advisors as well as other professionals get new wealthy clients is from referrals from satisfied clients. Generally, all manner of professionals tend to wait and “magically” a client makes an introduction. The “magic” is where your client, for instance, is asked by someone for a referral to a financial advisor. He or she thinks of you and makes the effort to refer. While there are powerful ways to increase the probability of client referrals, few professionals are taking steps in that direction. Thus, our discussion revolves around this “magical” approach.

As your client is being reactive to someone asking for direction, there is no screening and therefore it is often unlikely that that individual matches your “preferred client.” At the same time, the potential for new wealthy clients is limited and thus there is little chance of creating a steady flow of new wealthy clients. Because the approach is client reactive, you do not know when you will get referrals. They just appear when they appear.

Client Events: Your ability to showcase your expertise in front of high-potential groups is another proven approach to surging new wealthy clients. Unfortunately, the effectiveness of the approach—for the most part—is comparatively low compared to the two other approaches. 

A major complication is the quality of the audience. Very often, you do not really know—good or bad—who is attending the event. At the same time, there is a high probability that wealthier clients are not inclined to attend most events unless those events are tied to some organization where they are members. Even then, there is a good chance attendance will be limited. 

The ability to create a pipeline of new wealthy clients is often a function of the number of times you present. You will have to do a great many presentations in order to generate a flow of new wealthy clients and as most venues are somewhat restrictive, this is not usually an option. Complicating the ability to present extensively is that many professionals in your field are seeking to do the same. The considerable competition for the best slots diminishes the value of this approach.

To make this approach work, you will need high-quality content and be able to present fairly well. The content has to really resonate with you audience. It also has to be delivered with precision. Many times, professionals deliver dated content and some of them are not very good orators. So, even though they are accessing viable venues, their results are not great.

Bottom Line
If you are technically proficient and have a solid business model, you will still need to connect with the wealthy in order to have a successful high-net-worth practice. There are many ways to do this. The three discussed are—at this point in time—the most effective.

Referrals from COIs are—hands down—the most powerful approach. It requires you develop a deep understanding of other professionals and an ability to add value to their practices and sometimes their personal lives. The processes and systems for creating a pipeline of new wealthy clients from COIs is well known. However, effective implementation is where things most often fall apart. “Advisors need a field-proven track to follow, and tactical guidance along the way. Otherwise, it’s like putting together an engine without instructions”, says Van Bortel.

It is usually smart to take steps to help your satisfied clients introduce you to your “preferred clients.” Waiting for a message from a client about a referral is pervasive but leaves a massive amount of possibilities on the table, untapped. There are easy to implement methodologies you can employ to dramatically increase the number of client referrals you receive.

If you are comfortable presenting, doing so at selected events can help deliver new wealthy clients to your practice. Here, it is important that the material you discuss is meaningful to the audience. By doing some homework, you can seriously increase the odds that your content will generate a positive reaction.

When it comes right down to it, you can connect with many new wealthy clients if you think strategically and then tactically. With the tremendous growth in private wealth, there is probably no reason you cannot build a substantial high-net-worth practice. The primary obstacle is to choose research-based approaches versus anecdotal. Your prospective wealthy clients are waiting for you.

For a complimentary PDF copy of Street-Smart Networking: How Financial and Legal Professionals can Cultivate Centers of Influence for a Flood of New Affluent Clients request the book from [email protected]