Most financial advisors pride themselves on knowing what really matters to their high-net-worth investors. But do they actually know? Consider this: it is human nature to assume others want what you want. Following that out to its logical conclusion, since most financial advisors want the portfolios they manage to perform well, they assume their affluent clients have the same primary objective.
Well, think again financial advisors. When high-net-worth investors discuss what they really want from their financial advisors, investment performance is not in the top five things they mention. Why not? Because they hired you assuming good investment results would be taken care of. What really matters to them are financial concerns that go beyond portfolio performance.
So take a moment and shift gears. If you believe your affluent investors have confidence in you and trust you, schedule time to have a heart-to-heart conversation about what really matters to them. You may be surprised by what you learn.
GrizzlyRock Value Partners was up 34.54% net for 2021. The fund marked 10 years since its inception with a 198% net return, resulting in an annual return of 11.5%. GrizzlyRock enjoyed 14.8% long alpha against the S&P 500 and 26.9% against the Russell 2000. Q4 2021 hedge fund letters, conferences and more The fund's short Read More
For instance, first and foremost you will discover they are concerned about losing their wealth. I sat with one such client in earlier this year and she bemoaned to me the fact that she is afraid of running out of money before she dies. Her eyes welled up with tears as she shared her fear. She is seventy-five years old, has ten million dollars invested and lives a modest lifestyle.
Second, you will likely be told of their concern about making sure their heirs are well taken care of. Addressing this issue typically requires planning that goes far beyond astute investment planning, and may involve a team of professionals including an estate attorney and insurance specialist. For example, your affluent client may have a special needs child needing lifetime protective planning.
The next three matters you are likely to discover during your heart-to-heart conversation are: concern about having adequate medical insurance, concern about being sued, and concern about having enough money in retirement. By now you may be thinking, “No way, they are going to tell me they want to pay less in taxes.” Yes, affluent investors do want to minimize the taxes they pay; but again, like good investment performance, that is an issue they expect addressed as part of your investment and income planning on their behalf. It is not part of the heart-to-heart conversation identifying what they want their money to do for them.
When financial advisors quarterback solutions for those all-important top five matters for their affluent investors, their clients are positioned to continue down their list of planning concerns. Next on list of what really matters to them is often a desire to help their grandchildren with higher education expenses or a desire to plan for their charitable aspirations.
Imagine how quickly satisfied high-net-worth clients become loyal clients when a financial advisor provides not only astute investment advice, but also delivers solutions to satisfy the top five things that really matter to them.
Article by Joslyn G. Ewart, CFP®
Joslyn G. Ewart is Founding Principal of Entrust Financial LLC®. Her deepest passion is to help others make the right choices at pivotal times in their lives, thereby easing financial concerns. This passion also inspired her to write Balancing Act: Wealth Management Straight Talk for Women (August 2016). Ewart earned her Bachelor of Science degree from Case Western Reserve University, her Master’s from Temple University and Principal’s Certifications from University of Pennsylvania. She has attained the Certified Divorce Financial Analyst™ (CDFA™) and CERTIFIED FINANCIAL PLANNER™ (CFP®) professional certifications.