Moving upmarket refers to working with wealthier clients. In a survey of 608 financial advisors and life insurance agents, about 92% of them want to move upmarket. The desire to move upmarket is becoming more pervasive and stronger because of many factors such as market volatility, increased competition, and fee compression. For a great many advisors to do well going forwards, they need to work with wealthier clients—they need to move upmarket.
The research indicates there is a strong desire among advisors to work with wealthier clients. Very telling is that only about 11 percent of the advisors surveyed say they have been able to meaningfully move upmarket. That means, almost all advisors lack the technical proficiencies or the business development capabilities or both to move upmarket.
For a solid percentage of advisors to move upmarket, they likely have to change their business model. For example, the ultra-wealthy—who are individuals and families with a net worth of US $30 million or greater—commonly require advisors to have a different business model than clients of lesser affluence. Yes, the ultra-wealthy are regularly in need of investment management expertise, as well as life insurance, but how to best work with them is often vastly different from clients of lesser wealth. More specifically, the ultra-wealthy are choosing to work with multi-family offices and family office practices over ALL other types of professionals.
Putting the advisors’ business models aside, the biggest obstacle to moving upmarket is connecting with wealthier clients especially if the objective is to connect with them on a preferential basis. Without question, there are various ways to connect with the wealthy with the most common being client referrals. However, as the client's level of wealth increases, client referrals prove less and less effective. There are pockets of exceptions to the diminishing value of client referrals. But these are exceptions and even they are unlikely to provide a steady stream of new wealthier clients.
So, what is the most effective way to move upmarket?
The predominant answer is referrals from other professionals. This conclusion is not a surprise to most advisors. The idea of getting wealthier clients from accountants and attorneys can be considered common knowledge among advisors. The six percent of advisors in the research study cited above reported that the way they were able to connect with significantly wealthier clients was because of referrals from accountants and attorneys.
The complication for most advisors wanting to move upmarket is that they are either not focused on getting wealthy client referrals from other professionals or, if they are focused on doing so, they are not getting any substantial traction. While many advisors do indeed get referrals from other professionals, it tends to be an almost random failure rare event.
There are methodologies advisors can implement to not only ensure they are introduced to much wealthier clients from other professionals but that they create a steady stream of these higher-net-worth clients. There are different approaches to building strategic arrangements with other professionals and one such approach is Ultimate Rainmaker.
Ultimate Rainmaker is an empirically derived, time-tested methodology for building a pipeline of new wealthier clients. It is not about “trading” clients. With Ultimate Rainmaker, for example, advisors never have to introduce professionals to their clients but will still be referred by other professionals to their wealthiest clients.
Ultimate Rainmaker is first and foremost about delivering greater value to the wealthy. Secondarily, it is about helping other professionals such as accountants and attorneys become more successful. Lastly, Ultimate Rainmaker is about advisors generating significantly more revenues by working with much wealthier clients than they are working with presently and these much wealthier clients are referred by other professionals. With Ultimate Rainmaker, everyone wins and wins big.
Ultimate Rainmaker is likely the most effective way to move upmarket.
RUSS ALAN PRINCE is the Executive Director of Private Wealth magazine (pw-mag.com) and Chief Content Officer for High-Net-Worth Genius (hnwgenius.com). He consults with family offices, the wealthy, fast-tracking entrepreneurs, and select professionals.