An entrepreneur sold his company for about $50 million U.S. after taxes. For months, he has been talking to an advisor at an international major bank and an advisor at a world-renowned brokerage firm about managing the proceeds from the sale of his company. A multi-family office professional was introduced to the entrepreneur by his accountant. Within two weeks, the multi-family office professional was wired U.S. $50 million to manage. Aside from managing the assets, there are going to be additional ways to deliver value to this client from helping him with his estate plan to providing him with life insurance.
A highly successful social media influencer was becoming exponentially more successful. She was questioning if her financial planner and the other professionals she using including her business manager were up to the job of helping her reach the level after next. Her accountant made an introduction to a multi-family office professional and it quickly became clear she was missing some potentially significant opportunities. For example, she was not making the most of her loan-out corporation. The multi-family office professional started working with her and the first order go business was to revamp her estate plan including providing life insurance to help address estate taxes.
An old-money client worth of a trusts and estates lawyer who is worth more than U.S. $100 million was working with a multi-family office. He felt he was getting great results from the multi-family office. But the trusts and estates lawyer was not so sure so he connected the client with a different multi-family office professional. During the conversation, it was discovered that there were areas where the client was not getting superior results. It turned out that the multi-family office the client was working with was not much of a multi-family office—an all too common phenomenon. This led to the client transferring more than U.S. $50 million to the new multi-family office professional.
All these examples encapsulate what it takes to takes to build an extremely successful practice working with the ultra-wealthy. Increasingly, all manner of private wealth professionals from attorneys to accountants and from multi-family offices to bankers want to work with the ultra-wealthy defined as individuals and families with a minimum net worth of U.S. $30 million or more.
The logic of working with the ultra-wealthy is solid. They often require an extensive set of expertise to optimize their financial lives. They are also very willing to pay well for value.
So, what does it take to most efficaciously connect with the ultra-wealthy?
According to Homer Smith, director of the DK Family Office Practice, founder of Konvergent Wealth Partners and co-author of Optimizing the Financial Lives of Clients: Harness the Power of an Accounting Firm’s Elite Wealth Management Practice, “When it comes to the ultra-wealthy, client referrals are not that likely. They do happen but it’s a poor way to go if you want to build a clientele with this level of wealth. The best approach is to build strategic relationships with professionals they are working with and trust. These professionals are commonly accountants and attorneys, but they can be other people who are well-networked among the ultra-wealthy.”
There are time-tested, proven methodologies that can generate a steady stream of new ultra-wealthy clients for advisors. One such methodology is Ultimate Rainmaker, which is predicated on the Law of Reciprocity.
Aside from connecting with the ultra-wealthy, it is necessary to be able to deliver value beyond what they are presently receiving from their current advisors. And, it is crucial to recognize that most of the ultra-wealthy have a set of professionals they are working with which can commonly work in the favor of the advisor referred in by an accountant or attorney.
Most of the ultra-wealthy are poorly served. That’s because most professionals are focused on what they do and don’t really understand their clients outside of their siloed expertise. The ultra-wealthy quite often are getting subpar results and not realizing it. However, once we help them understand what is possible, the ultra-wealthy will make changes quickly and one of those changes is whom they’re working with.
Along the same lines, the advisor’s business model is critical. Being able to address a broad range of goals and concerns synergistically usually enables advisors to deliver greater value. According to Vince Annable, CEO and founder of VFO Advisory Group and co-author of Your High-Performing Virtual Family Office: Maximizing Your Financial and Personal Lives, “The ultra-wealthy want the advantages the super-rich get from their high-performing single-family offices. We’re able to deliver to them many of those same advantages through our virtual family office which gives us a competitive leg up on the advisors they’re currently engaging.”
The two components that advisors need to consider if they want to serve the ultra-wealthy are how to connect with them and how to deliver greater value than the advisors they are currently using. The answers are straightforward.
The best way to connect with the ultra-wealthy is by being introduced by other professionals they trust such as accountants and attorneys. Ultimate Rainmaker, done well, is a very powerful way to create a pipeline of new ultra-wealthy clients. However, it is not enough. Advisors, after being introduced, still have to demonstrate they can make a significant difference in the lives of these individuals and families.
As so many of the ultra-wealthy are poorly served there are many opportunities to demonstrate greater competency. For a large percentage of the ultra-wealthy, high-performing family office practices are the way to optimize the financial lives of the ultra-wealthy and consequently displace their current advisors.
Russ Alan Prince is the executive director of Private Wealth magazine and chief content officer for High-Net-Worth Genius. He consults with family offices, the wealthy, fast-tracking entrepreneurs and select professionals.