How to win a $1B client

Article

February 24, 2022  |  4 min read

By Eddie Brown, managing director and head of Schwab Advisor Family Office 

Despite the challenges of the pandemic, the ultra-high-net-worth (UHNW) population – often defined as those with at least $30 million in net worth – and its subset of billionaires are growing considerably. After rising 9.7% in 2019, the global billionaire population jumped 13.4% in 2020, and the combined net worth of UHNW individuals increased to $35.5 trillion.1 

Independent advisors who focus on the expanding UHNW population have a big opportunity to grow their practices with this category of wealth. Many are looking to win their share of UHNW clients with solutions that will allow them to establish long-term, sustainable relationships – and they are particularly well-positioned to do so today.  

More options, higher expectations  

UHNW clients have more options than ever for managing their wealth and see great value in building a trusted advisory team. According to Schwab internal data, only about 10% of UHNW households choose a registered investment advisor (RIA) that specializes in UHNW clients. That may seem counterintuitive, but these individuals and families often work with different advisors in order to assemble the “best of breed” to meet their personal and financial objectives holistically.  

The UHNW are selecting advisors who have experience working with other clients like them, have access to specialized services, and can help simplify their lives. Their expectations for service and responsiveness run high as they seek out objective advice and transparency. 

Compared to affluent investors – those with a net worth between $100,000 and $1 million – UHNW investors have different investment needs and have access to a wider scope of investment products. Some are self-directed with all or a portion of their assets. They typically hold a higher allocation to cash as they seek investment opportunities, including alternative and private investments. They also create charitable vehicles and even use leverage of low interest rate markets for arbitrage. 

The trends, behaviors, and expectations of billionaires are similar to those of the larger UHNW segment, but the extra zeros in net worth bring even more complex needs and more options to serve them. For billionaires, single and multi-family offices are increasingly becoming the preferred models as opposed to traditional private banks or wire houses. In response to rising demand, RIAs and multi-family offices are expanding the range of services they provide to meet UHNW needs.  

You’re not alone (or you shouldn’t be) 

Serving the UHNW is not for every firm; advisors must be willing to commit the time, people, and capital resources necessary to define and maintain a distinct offering. My team recently spent six months with an advisory firm to help them develop what ultimately proved to be a successful UHNW offering. Part of the process was identifying the ideal family profile and building a detailed, realistic plan to reach them. 

"It’s important to invest in the skills and client experience required to serve the UHNW segment, but firms do not need to be one-stop shops."

 

Eddie Brown, head of Schwab Advisor Family Office 

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Many UHNW clients are comfortable working with teams of experts from different organizations; in fact, they may expect it. You have the option of building a network to fill skills gaps, add services, and attract UHNW clients when you do not have all the necessary capabilities in house.  

Firms and advisors that are transparent about their knowledge, services, and fees can build deeper relationships with UHNW clients. Hoping to “fake it ‘til you make” is probably the wrong choice for this segment. They value trust above all else, and you should expect them to sense when you are in over your head.  

Take off your sales hat! Ask and listen… 

Almost every day, UHNW clients meet people who are trying to sell them something. Avoid the temptation! Remove your sales hat, establish a connection, and ask questions to learn what’s really important to them beyond money.  

With virtual work now a normal part of financial advisory, there are even more ways to reach clients and important family stakeholders. “Post-pandemic” many spouses and children have been happy to meet on video, where they may feel more comfortable (at home) than in a boardroom. Consider whether there are opportunities in your existing book of business to develop new relationships virtually.  

You can really differentiate your practice in the eyes of UHNW prospects by seeking to understand the wider circle of stakeholders on a personal level and listening for how to be a resource. Some advisors, however, are understandably concerned about what happens when a more personal discussion leads outside a firm’s area of expertise.  

The good news is that it does not have to be the end of conversation; in fact, it can be the opposite. If a client asks about something outside your service offering, such as managing family dynamics, that is an opportunity to address a real need with an outside expert. Deeper relationships start when clients find solutions.    

Be prepared 

Advisors will continue to win UHNW business because the market is big and growing. You can start by reflecting on your firm’s strengths and weaknesses. Commit to being educated and strategic about building a distinctive model to serve the known needs of UHNW clients. Then focus on building authentic relationships with new UHNW clients and continuing to do great work for your existing clients.  

You may also need to change your view of what it means to “win” the UHNW client or $1 billion relationship. It does not have to mean an eight or nine figure inflow. These relationships tend to grow for advisors who focus on building confidence over time and aspiring to be the “first call” for clients.  

Winning may even mean passing on an opportunity. If a need is not a fit for you or your firm, being transparent about that will build trust for future referrals and requests.  

That’s another way of saying that winning a $1 billion client is a long game. You never know when a client or prospect may have a major liquidity event. So be prepared, thoughtful, and ready to call in experts.  

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Wealth-X, World Ultra Wealth Report 2021. 

Schwab Advisor Services™ serves independent investment advisors and includes the custody, trading, and support services of Charles Schwab & Co., Inc. (“Schwab”). Independent investment advisors are not owned by, affiliated with, or supervised by Schwab.