How high-net-worth individuals choose an advisor

August 27, 2018 by Moriah Diedrich

A hig-net-worth couple relaxes by the water and smiling

About the author

Moriah Diedrich

Demand generation specialist

Moriah Diedrich is a demand generation specialist at NaviPlan, the financial planning technology provider of choice for more than 140,000 financial professionals.

Differentiation is one of many pieces in the puzzle of developing a successful practice in the financial services industry. However, the reality is that most financial institutions behave the exact same way so it is difficult to attract highly sought-after clients. For example, many advisors are looking to reel in high-net-worth (HNW) clients, but they have not investigated how these individuals go about selecting an advisor.

The Future of Advice report generated by Advisor Authority in 2017 gives several insights on the elements that HNW individuals consider as they compare advisors and their practices. Of these factors, the most important include advisor experience, holistic planning, and a fee-based fiduciary standard. Let’s take a deeper look at these factors and how they can help your firm attract HNW clients.

Advisor experience

Advisor experience is often thought of as the number of years an advisor has been practicing, but can actually be demonstrated and supplemented in a number of other ways. For newer advisors, length of service may not instill confidence in potential clients so it may be beneficial to work jointly with more experienced advisors. Further, you might demonstrate competence by sharing stories of how you have helped clients in a similar financial situation as the prospect. This approach not only communicates your expertise but can also help deepen the relationship with the prospect.

Holistic financial planning

With greater investable assets comes greater complexity in developing a financial plan that will help your clients achieve their goals. HNW individuals seek advisor expertise on estate planning, investment management, tax planning, and a number of other topics, so it is important to demonstrate your knowledge and thoroughly support recommendations. Scalable tools like NaviPlan have the power to model intricate financial situations – from ROTH conversions to planning an out-of-state retirement – and can significantly reduce the time that advisors spend on plan creation. Being able to guide clients through their financial picture can help them see the validity of your recommendations and can make all the difference in the client’s decision to work with you.

Fee-based Fiduciary Standard

Lastly, the report from Advisor Authority showed that investors prefer advisors who charge a flat rate for their services instead of operating based on commissions. While commission-based advisors are only required to provide clients with suitable options that meet their needs, fee-only advisors are legally required to act in the best interest of their clients. Many investors feel that choosing a fee-based advisor puts the advisor on their side and will reduce their chances of being taken advantage of. The NaviPlan client portal gives clients 24/7 access to monitor their personal financial plans with transparency and guaranteed security, while encouraging communication between advisors and their clients. This feature allows clients to continuously track and evaluate their plan progress, making it easier for them to find value in the relationship and to trust your recommendations.

Demonstrating the value an advisor provides can be challenging, but the right tool can help communicate your understanding of holistic financial planning and show clients that you deserve both their trust and their business.

To learn more about how Advicent technology can help you serve high-net-worth and ultra-high-net-worth clients, click here.