How Wealth Managers Are Winning Business With the Ultra Wealthy

7/28/2019 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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HOW WEALTH MANAGERS ARE WINNING BUSINESS 2

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.


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.


2. Do Your Homework

Exclusive intelligence helpsdeepen understanding ofthe UHNW population anddevelop trust betweenwealth professionals andtheir clients.


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.


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.


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.


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.
mailto:[email protected]://www.byallaccounts.com/http://www.byallaccounts.com/http://www.byallaccounts.com/http://www.byallaccounts.com/mailto:[email protected]

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How Wealth Managers Are Winning Business With the Ultra Wealthy