Hitting the Mark With Today's Best Investment Clients: Cultivating New Business in the Current Climate

Ron Corker  |

An elite group of financial consultants represent the top 5-percent of finance practitioners who earned $1 million for each of the last three years. These industry leaders display more extensive capabilities than their peers, especially regarding outstanding alternative investments.

Some wealthy speculators are more comfortable with traditional investment options, while others prefer a wider range of opportunities. This breed of investor expects the broker to source and deliver a broad range of strategies and exposure levels, a capability that’s the norm among sophisticated, elite finance advisors.

Ideally, any financial advisor would like to acquire a large portfolio of high-net-worth (HNW) clients. However, this is not the case for many aspiring financial consultants. In fact, attracting and retaining HNW clients is a challenge shared by advisors across the industry. To prosper in this environment, many advisors search for ways to ensure the most profits from their existing high-net-worth clientele. To achieve this, planning is essential. More importantly, ambitious advisors must develop a unique value proposition and a reputation for stellar ethics to attract new clientele, rather than waiting for large investors to walk through the door.

How Are the Best Brokers Doing It?

A recent survey of 800 financial advisors reveals that all consultants provide investment management services for their clients. However, most do not provide hedge funds or private equity funds as a part of their primary offering. In these cases, many investors are missing out on potential profits.

Investment experts report that much economic growth takes place outside the scope of public markets, and profits from this growth is realized by a relatively small group of private investors. Industry veterans believe that more qualified investors should have increased access to private markets, which provide diversification and long-term growth opportunities like those delivered by the past equities market. Among the polled financial consultants, however, only 20-percent of all advisors had access to these resources, compared to 100-percent of all the highest earning consultants.

Despite this access, the top earning financial consultants aren't delivering hedge funds and private equities to all, or even a significant portion, of their client base. Yet, they can quickly identify and analyze a group of funds and execute transactions as needed. The next level of consultants, who trail right behind the top 5-percent of advisors, earning between $500,000 and $1 million per year, are beginning to develop this capacity as well. Among this group of advisors, there's ample opportunity for expansion.

For now, experts suggest that the top 5-percent of advisors will likely continue to dominate the field when it comes to working with high-net-worth investors. Still, advisors who wish to attract HNW clients have a better chance of doing so by acquiring access to more sophisticated investment solutions.

Finding Capable Investors

The first step to acquiring HNW clients is attracting their attention. Also, HNW clients greatly value their time, making it essential to streamline the onboarding and information gathering process while facilitating a smooth transition into the firm. High-net-worth clients have more complex needs that require varying levels of service. To retain these clients, personalized service is critical for satisfying this type of investor. Additionally, advisors must deliver the value that they promise.

High-net-worth clients also value business, estate and tax planning consultation. Adept financial advisors help clients to contemplate unforeseen future planning needs. Using the latest technologies, today's financial planners can provide visualizations for multiple investment outcomes in moments. This kind of enhanced service is exactly what HNW clients demand. Additionally, high-net-worth investors want to retain their wealth across generations. Legacy planning is one of the most valuable services you can provide for this highly desired clientele.

Getting Started

The US Department of Labor reports that the number of financial advisors will increase by 15-percent in the years preceding 2016, resulting in more than 40,500 new consultants. Launching and developing a career as a financial advisor is challenging. While these professionals earn a handsome living, building clientele and a steady income can prove difficult for beginners. Experts recommend that new advisors expand their circle of influence. During this phase, freshly minted financial consultants should work on building referrals that will provide enduring business. In today's market, social media platforms are an effective prospecting resource for reaching high-net-worth investors.

The most sought-after investment clients expect increased efficiency, transparency, online access and innovation. At the same time, this group has concerns about privacy, cybersecurity and the diminishing presence of human interaction with advisors. Today's financial advisors can gain a competitive edge by providing a personal connection, innovative technologies and assurances that investor’s financial legacy will pass on to their heirs. Additionally, it's important to continue servicing investor’s assets as they pass through generations to ensure ongoing clientele. To facilitate this, investors can encourage high-net-worth clients to include their heirs in the planning process. By doing so, financial advisors can build a sustainable portfolio of high-net-worth investors that will last a lifetime.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

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