How Wealth Managers Are Winning Business With the Ultra Wealthy
Transcript of How Wealth Managers Are Winning Business With the Ultra Wealthy
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by James Carney
HOW WEALTH MANAGERS ARE
WINNING BUSINESSWITH THE ULTRA-WEALTHY
Find out how to:
Assess the size of the market opportunity with this elite clientele.
Prepare in-depth proles on specic individuals.
Develop a robust referral business to expand your assets and revenues.
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I hear regularly from our clients about thechallenges they face trying to further developbusiness with high-net-worth investors. Yet thisis a large and growing market and, for many, thatis important for their long-term strategies. Given
this, I took the opportunity to speak with DavidFriedman, President of Wealth-X, a provider ofdetailed intelligence on ultra high-net-worth(UHNW) individuals around the world, to get hisviews on how best to tackle this segment.
According to Wealth-X, the fortunes of theUHNW population, dened as individuals witha net worth of at least $30 million, continue to
grow and has surpassed $25 trillion
1
globally.North America has the largest concentration,representing 33% of this total wealth.
Despite overall growth, David feels thatAmericas ultra-auent face a multitude ofchallenges. Amid increasingly volatile markets,the rich have begun to take a more bifurcatedapproach to investing, he says. They are
retrenching to arenas where they made theirmoney to help them grow again, and are
segmenting their investment strategy into twomajor buckets. One is risk capital where they areinvesting in risky private and entrepreneurial
pursuits. The other is risk-managed capitalwhere they are looking for multi-asset, globalportfolios with sophisticated risk managementtechniques applied.
In addition, David sees that the money ofAmericas richest is in motion with one in everythree UHNW individuals reportedly looking to
change their asset manager or wealth advisor.Wealth is an intimate conversation, andtherefore centers on trust, he says. Platforms,
brands and products have become commoditizedmaking it less about the individual relationship.
INSIGHTS FROM:
David Friedman,President, Wealth-X
Wealth-X provides intelligence on ultra
high-net-worth (UHNW) individuals, along
with the privately held companies they
control. The rm proles individuals who
represent $10.7 trillion of the worlds net
wealth offering details on their wealth,
income, passions, philanthropic interests,
aliations, politics, advisors, families and
biographies.
James Carney
President & CEO,ByAllAccounts
1 All Wealth-X estimates and forecasts are based on analysis of a
wide range of government, banking and media sources, along
with proprietary research generated from the Wealth-X database.
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Building client relationships is a battle for heartsand minds; if your quarterly review is only aboutportfolio performance, you are setting yourselfup to be easily replaced. Successful advisorsmust offer a unique and exclusive experience for
the ultra-rich.
How can this trust be developed and reinforced?Both David and I feel it calls for knowingyour clients and prospects in detail. You
must understand the distinct prole of eachindividualtheir background, career history,likes and dislikesto engage with them in away that is meaningful and relevant to their
interests, cares and hobbies. If you really wantto connect with them, you will have to learn to
be passionate about their passions.
This paper draws on my conversation with Davidto describe how you can:
Assess the size of the market opportunity with
this elite clientele. Prepare in-depth proles on specic individuals Develop a robust referral business to expand
your assets and revenues.
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Key Takeaways
The global market of UHNW individuals has
expanded beyond 185,000 and approximately33% of the super-rich live in the U.S.
Determining whether this is a target marketfor you will require a critical assessment ofyour capabilities and ability to deliver thetable stakes.
Beyond this, you must be able to customize theinteraction based on the unique needs of eachindividual and build relationships based ontrust.
Understanding an individuals background,education, club and board membershipsand more will give you an opportunity to have
a conversation that captures their attention bytouching on their interests and passions.
Best practices in the UHNW market show that
cold calling rarely works and most of yourgrowth will come through referrals.
Having intelligence on your clients can help
you determine what the overall marketopportunity is for you, your market shareand your wallet share.
Top performing advisors in the UHNW spacecraft their wealth design around life goals, notjust comparing portfolio performance againstthe S&P 500. To do a deep wealth design, youneed to know everything about your clients
passions and goals in life. This means you needto have as much information about them as youcan nd to anticipate their needs without themeven telling you.
UHNW individuals aredesperate for trustedrelationships andcustomized experiencesthat meet their uniqueidiosyncrasies.
David Friedman, President, Wealth-X
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The Realities of Servingthe UHNW
While many advisors I speak with dream ofserving the UHNW investor, it can be more
complicated than imagined. UHNW individualstypically expect excellence in all areas of thebusinessfrom the breadth of your productoffering to detailed reporting and a high-touchservice model. You may also need to become
involved in intricate family dynamics and havecapabilities to handle family governance, estate,regulatory and tax issues.
If you are looking to target this segment for therst time, or further expand your business, I feel
it is prudent to begin by critically assessing whatis needed to be successful from an operationalperspective. Among other things, I believe thisincludes having:
A holistic approach to investment managementthat takes into account all assets a client owns.
An approach to asset allocation that provides
attractive risk-adjusted returns using strategiesthat are customized for each clients investmentgoals and risk tolerance.
Timely and comprehensive performancereporting.
The ability to provide investment advice on
retirement accounts.
Support for tax and legal issues.
A proactive and top-notch service model.
If you can meet these requirements, with yourown rms resources or in partnership withother professionals, you have an opportunity to
serve the UHNW.
Next you should consider the type of UHNWindividual you would like to serve since theircharacteristics, needs and demands can vary
enormously. In part, this will depend on how
they acquired their wealth. Entrepreneurs, forexample, may be more interested in advice onhow best to nance acquisitions to expand their
business, while those who have inherited theirwealth may be more interested in strategiesfor transferring wealth to the next generation.As with any prospect group, matching theirneeds with your strengths and the personalityand culture of your business will help ensure
you nd the right t for a long-term, mutuallybenecial relationship.
When you are ready to proceed with youroutreach activities, consider following a simple
three-step process:
1. Size your market opportunity anddetermine where the UHNW are located toeffectively target your initiatives.
2. Do your homework before you meet withany candidate so you can relate to them on apersonal level and start to build trust at theoutset.
3. Manage your existing clients socialcapital by uncovering who they know and
making it easy for them to provide referrals byhaving specic targets in mind.
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1. Size Your MarketOpportunity
Advisors should leverageaccurate and distilledintelligence to identifylocations that have apredominant presenceof the ultra-wealthy.
David Friedman, President, Wealth-X
Wealth-X estimates that the global market ofUHNW individuals has now expanded beyond185,000. While about 33% live in North America,29% in Europe and 23% in Asia today, the rapid
growth of wealth within developing Asia maysoon change this picture.
Within the U.S., California with its size androbust wealth generating clusters, like SiliconValley, has 18% of the nations UHNW individuals
New York follows closely behind with 13%. Intotal, the top ve states (California, New York,Texas, Florida and Illinois) account for more
than 50%.
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UHNW Market by U.S. State
California 18%
New York 13%
Texas 10%
Florida 6%Illinois 5%
All OtherStates 48%
On a city level, New York City leads with over 13% of the U.S. UHNW population, followed by LosAngeles (8%), San Francisco (7%) and Chicago (5%). Despite the massive wealth transfer that isexpected to take place from the baby boomers to their children, Wealth-X believes that the ultra-rich
will remain geographically stable over the coming years.
UHNW Market by U.S. City
New York 13%
Los Angeles 8%
San Francisco 7%
Chicago 5%
Washington 4%
Houston 4%
All Other
Cities 59%
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Cross-referencing this data against your currentbase of UHNW clients will enable you to assessyour market share and the untapped opportunityof each region. Wealth-X also provides informationon net worth assessments for the thousands of
UHNW individuals they maintain data on intheir system. For your existing UHNW clients,this enables you to look at how liquid they trulyare and your actual share of wallet. Matchingthis with a holistic view of their assets using
ByAllAccounts data aggregation technologyprovides additional information on the moniesthey may have that you are not currentlymanaging.
Our clients often nd their
investors are worth a lotmore than they realizedproviding an opportunityto increase share of wallet.
David Friedman, President, Wealth-X
2. Do Your Homework
Exclusive intelligence helpsdeepen understanding ofthe UHNW population anddevelop trust betweenwealth professionals andtheir clients.
David Friedman, President, Wealth-X
One of the key trends in reaching UHNWindividuals is speaking to them about their lifegoals and how to clearly dene life priorities sothey can use their wealth for things they deem
are truly important. To do this effectively, saysDavid, you need to be familiar with who theyare to steer the conversation. This also enables
you to connect with them on a personal level andcreate a deeper relationship. Most importantly,showing you took the time to understand themimplicitly builds trust from the start.
Wealth-X provides detailed dossiers onthousands of UHNW individuals. This includesinformation on their background, career andeducation history, wealth analysis, philanthropy,clubs, boards, known associates and more. We
suggest advisors mine this information tounderstand the strongest connection they havewith the person they are about to meet. Forexample, if they both know the same accountant
or share a passion around exotic cars it providesa more personalized starting point for aconversation.
One investor said, If you walk in the door andstart telling me about what products you have,
my eyes will glaze over. If you walk in and speakto me about the 1985 Rolls Royce Phantom 6,youll have me for an hourand Ill want to meetyou again. Its about doing your homework andcreating unique experiences based on peoples
passion and hobbies.
Time is scarce with UHNWindividuals. You need toknow the narrative oftheir lives.
David Friedman, President, Wealth-X
This knowledge also helps you avoid makingmistakes that can derail things, says David.
We knew an individual who was donating asignicant amount of money to a particularcharity in support of an illness his youngdaughter had. If an advisor didnt know thisand started to suggest looking at different giving
opportunities, it would have cut the conversationshort.
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3. Manage Your ExistingClients Social Capital
Referrals are thelargest new source forprofessionals looking toacquire UHNW business.It is critical to effectivelymanage your clientssocial capital.
David Friedman, President, Wealth-X
There is little cold calling in the UHNW space,says David. Its almost all referral based,whether from existing clients, accountants,attorneys or the like. Thats how you build yourbusiness. Given this, advisors are tapping into
Wealth-X to create future lists of clients basedon who their existing clients know. This involvesthree steps:
Review a clients prole to identify friends,
colleagues and other associates in their businessand social networks.
Review the proles of these contacts to see
which ones t with the image you have of yourideal client, and cull the list accordingly.
Develop mini-plans for each prospect to try and
obtain introductions and arrange meetings.
In terms of best practices, says David, we havefound that if you are as specic as possiblein your request for a referral the probabilityof getting it goes up exponentially. Its the
difference between taking a client out for agolf game and a beer and asking for a genericreferral versus being specic about someoneyour client knows because they sit on aparticular board together. The more targeted and
explicit the request, the more likely you are toget it. This approach avoids having you hear noone comes to mind now, let me get back to you.
Its about connecting thedots in a systematically
disciplined way whileinteracting at a highly-customized level.
David Friedman, President, Wealth-X
It is also critical that you make it as easy aspossible for your client to provide a referralso you minimize the use of their social capitalas much as possible. For example, if you are
targeting someone on the board of a charity that
has an upcoming event, you should buy a tableand let your client know you will be at that eventand would welcome the opportunity to meet therest of the Board.
Its TrueInformationis Power
My discussion with David underscores the fact
that leveraging information to better connectwith the wealthy can yield results. Naturally,you must have all the other things in place
as wellthe product offering and servicelevelsbut creating trust based on personalizedinformation can be a real differentiator in thispart of the market.
David and his team have also found that accurate
and helpful intelligence actually gives peoplecondence when they walk into a room to have aconversation, increasing their chances of successThe more a person knows about a prospect, themore in control they feel. As you look to expand
this segment of your business, consider howyou can help personalize the relationship andconnect on a different level.
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David Friedman,President, Wealth-X
Mr. Friedman is a noted author
and speaker in the area of UHNW
business development practices,
having been quoted in the Wall Street
Journal,New York Times and The
Guardian on a broad range of topics
regarding the ultra-wealthy. He is a
regular contributor to Private Wealth
Magazine on UHNW market and
business development strategies.
Prior to co-founding Wealth-X,
Mr. Friedman spent ve years as
Managing Director at CB Richard
Ellis advising sovereign wealth funds
in the Middle East, Asia and Latin
America on billion-dollar real estatedevelopment projects related to
economic growth strategies.
Mr. Friedman has a Masters in
Philosophical Theology and Ethics
from Yale Divinity School and
graduated Magna Cum Laude from
Wheaton College in Illinois with a
political philosophy degree.
James CarneyPresident & CEO,ByAllAccounts
James is a co-founder of ByAllAccounts.
He and his teams have had a proven
track record of effectively building,
marketing and selling highly scalable,
complex solutions on time and within
budget.
Prior to co-founding BAA, James was
a co-founder and CEO of Bidders
Edge, the largest online auction portal
servicing greater than 500,000 users
on a monthly basis with information
available on over 8 million items on a
near real time basis. Company revenue
grew in excess of 100% each year with
expanding prot margins. Prior to
Bidders Edge, James was a co-founderand CEO of Workgroup Technology
Corp., which developed product
information management systems for
the engineering and manufacturing
environments. The company had
a successful IPO on the NASDAQ
exchange.
James holds a BS in Finance from
Babson College.
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Contact a ByAllAccounts Sales Representative
Phone: 781-376-0801 Option 2
Email: [email protected]
Live Chat: www.byallaccounts.com
About Wealth-X
Wealth-X is the leading global provider of
intelligence on UHNW individuals, allowingnancial advisors, luxury brands and non-protsaround the world to identify, qualify, connect thedots and cultivate trust with UHNW prospects.
The Wealth-X advantage is that all research andintelligence is curated manually by its researchstaff to ensure that it is accurate, timely andactionable for clients. Wealth-X offers access to itsonline searchable database of names and proles
coupled with its bespoke intelligence service to
meet the needs of our clients.
With around 200 people across 12 global oces,Wealth-X has become the authoritative voice on
the UHNW market. For more information visitwww.wealthx.com or call 877-887-8454.
About ByAllAccounts
ByAllAccounts, the nancial advisors choice
for data aggregation since 1999, is the onlyservice that retrieves, enriches and consolidatesreconciliation-ready account data from anycustodian. ByAllAccounts patented aggregation
engine, through which hundreds of billions inassets ow daily, aggregates all client accountdatafrom any sourcewithin an advisorswealth management platform or trust accountingsystem for a truly comprehensive view.
Thousands of advisors rely on ByAllAccounts tosave administrative time and costs, mitigate risk
associated with having incomplete informationand grow revenues through client referralsand new business development. ByAllAccountsintegrates seamlessly with all of the most
popular wealth management platforms. Formore information, visit www.byallaccounts.com or call 781-376-0801.
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