A study of high-end wealth managers, defined as earning $500,000 or more annually, found they are most concerned about business development. Seventy-two percent cite the challenge of finding wealthy clients. Fewer (65%) worry about gathering more assets, but growing their asset base is a significant concern.
The success many high-end wealth managers have had over the years was due to the growth in the markets, which is also why two-fifths of high-end wealth managers are uneasy because of market volatility. While the state of the markets is beyond the control of high-end wealth managers, this need not hinder their ability to grow their assets under management by sourcing new clients requiring investment expertise.
At the same time, a third of the high-end wealth managers are worried about fee pressure. Presently, the private wealth industry favors professionals over their clients. It is common for fees, especially investment management fees, not to be questioned much. Increasingly, wealthier clients, especially, will be looking to negotiate fees. As a growing number of professionals and consultants provide greater transparency and share the inner workings of the private wealth industry, the outcome will be even greater fee pressure and the need for high-end wealth managers to connect the value they deliver to their costs adroitly.
A contributing factor to the concerns around business development is that half a percent of wealth managers are concerned about greater competition for high-net-worth clients. For example, with other professional services also under pressure, some professionals, such as a growing number of accountants, want to add wealth management to their offerings. Although this can be restrictive to many high-end wealth managers, those who create strategic alliances with these professionals solve their problem of getting new wealthy clients and bolstering their assets under management.
Previous research shows that high-end wealth managers seek highly effective business development strategies. These circumstances will result in more and more of them looking for proven business development strategies, and this trend will put pressure on broker/dealers, custodians, money management firms, and aggregators to deliver viable methodologies for wealth managers to grow their practices.
Already, but more so looking forward, significant success for most high-end wealth managers will only be possible if they work with wealthier and more accomplished clients. This is why 60% are apprehensive about their ability to move up-market. Consequently, the business development strategies many high-end wealth managers are interested in are geared to working with the wealthy and business owners. What is also required is a wealth management platform that is resource-rich, enabling wealth managers to deliver exceptional value to the wealthy and business owners.
Thirty percent of high-end wealth managers are concerned about building a powerful brand to differentiate themselves from competitors. A powerful brand has been empirically shown to generate more referrals from clients and other professionals, such as accountants and attorneys. It has also been shown to quicken the conversion of prospects into clients. While systematic ways exist to build influential bands, many high-end wealth managers do not use these methodologies.
High-end wealth managers have multiple concerns, most of them around becoming more prosperous, including obstacles that can deter their success. Although there is a solid underlying logic for high-end wealth managers worrying about these issues, there are solutions for every one of them.
There are methodologies such as the Everyone Wins Process, for example, that empower high-end wealth managers to create a steady stream of new wealthy clients from current clients and other professionals. There is a process to build a powerful brand that translates into more business for high-end wealth managers. These various approaches enable high-end wealth managers to move up-market quickly and negate fee pressure.
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.