Upmarket is where clients are wealthier than most of the clients a wealth manager currently works with.These clients are more profitable on a per-client basis. A survey of 421 wealth managers shows that 65% want to move upmarket, which they define as working with more affluent clients. Meanwhile, 85% of those so interested have found it very difficult to do so.
Topping the list is an inability to source wealthier clients. While wealth managers tend to connect with clients that mirror their current clientele, slightly more than 80% cannot connect with wealthier individuals and families.
Decades of research with wealth managers tell us that finding new clients is consistently one of their most significant obstacles to success. While there are proven business development methodologies that can enable them to connect with increasingly wealthier clients, up to billionaires, relatively few wealth managers use them.
A reported factor contributing to an inability to move upmarket is a lack of time. Day-to-day operations limit many wealth managers from being strategic. A lack of time is highly correlated with difficulty sourcing wealthier clients. Specifically, building strategic relationships with other professionals takes time and patience.
About half the wealth managers surveyed see greater competition by moving upmarket. Without question, more and more wealth managers are increasingly interested in working with the wealthy. While these wealth managers have experience successfully competing for the clients they primarily work with, they will likely face sterner competition for more affluent clients. Many of them are unsure how to handle this situation.
Related to this point is that a similar percentage of wealth managers realize they must change their approach to work with wealthier clients. For example, extreme client responsiveness is necessary for most wealth managers who want to move upmarket, and not all of them can follow through effectively.
About a third of the wealth managers say they must upgrade their capabilities. Wealth managers moving upmarket must be able to provide state-of-the-art financial solutions as appropriate. Unfortunately, the range of expertise many wealth managers can deliver is restricted.
The appeal of working with wealthier clients—moving upmarket—is considerable. However, there are strong indicators that only a small percentage of wealth managers can transition to working with wealthier clients. Those who succeed will readjust their thinking and make the commitment.
These wealth managers will likely become adept at creating strategic relationships with centers of influence. They will also require the resources to provide exceptional value to the affluent. Interestingly, those wealth managers who move upmarket will have highly profitable practices.
Russ Alan Prince is the executive director of Private Wealth and a strategist for family offices and the ultra-wealthy. He has co-authored 70 books in the field, including Making Smart Decisions: How Ultra-Wealthy Families Get Superior Wealth Planning Results.