The High-Net-Worth Client: Position Yourself to Check Their Boxes

Every client segment has unique concerns, needs, and expectations. The high-net-worth client is no exception. For HNW clients, it’s not just about investments and account growth—it’s about what their money can do for them. 

Whether it’s leaving a legacy for their grandchildren, sailing around the world, or establishing a non-profit, wealthy clients expect their money to have an impact. And they expect their advisor to know what’s important to them and help them prioritize accordingly.

Your target clients should feel confident that you are both working toward the same goals while keeping their risk tolerance and financial philosophies in mind. If you want to target HNW clients, your value proposition, business plan, services, and toolsets should all reflect that.

Keep reading to learn more about the HNW client and how you can adjust your practice to check all their boxes.

Meeting the Needs of High-Net-Worth Clients

Today’s HNW client is often looking for holistic financial services. Investment Management is just one aspect of the HNW client dynamic. The top three things HNW clients say they pay their advisors for are:

• On-going guidance/advice to help them reach their goals (90%)
• Help in avoiding costly financial/investment mistakes (84%)
• On-going monitoring of their goals (81%)

Once a client reaches a certain level of wealth, their needs become more complex: they become more concerned about protecting their hard-earned assets, they are better positioned to leverage that wealth, and they want to pass on that wealth in a tax-efficient way.

If you are looking to establish or solidify your foothold in the HNW Market, understanding the unique expectations of this growing population and having the capabilities to meet their needs will pave the way for you to achieve long-term success.

Mass Affluent vs. High-Net-Worth Clients

When it comes to service, is the high-net-worth client the same as the mass-affluent client, only wealthier? The short answer is… not exactly.

Financial advisors typically differentiate between mass affluent and high-net-worth clients based on their level of wealth. Mass affluent clients are generally considered to have a substantial amount of investable assets, typically ranging from $100,000 to $1 million. They may have complex financial needs but generally require less sophisticated strategies and services compared to high-net-worth clients. 

High-net-worth clients, on the other hand, are individuals with significant wealth, often exceeding $1 million or more in investable assets. These clients usually have more complex financial situations, requiring specialized expertise and tailored solutions to address their wealth management, estate planning, tax optimization, and other unique needs. They may have more diverse investment portfolios, including alternative investments, private equity, and real estate. 

Additionally, HNW clients often seek specialized services, such as family office support, legacy planning, and generational wealth transfer. In contrast, mass affluent clients typically benefit from more straightforward financial planning, retirement savings strategies, basic investment advice, and risk management solutions tailored to their goals and risk tolerance. While both client segments require personalized attention, the depth and sophistication of services provided to HNW clients tend to be more extensive.

The High-Net-Worth Client Checklist

HNW clients typically have larger investable assets, which can translate into higher revenue potential for advisors. Their need for complex wealth management solutions offers an opportunity to showcase your expertise with value-added services and sophisticated investment strategies. Best of all, HNW clients often maintain long-term relationships with their advisors, leading to a stable and loyal client base. 

Additionally, effectively meeting the needs of your HNW clients can increase the likelihood of earning networking opportunities and potential referrals to other affluent individuals. This strategy can help enhance the reputation, revenue, and professional growth of your firm.

Cerulli reports, at least half of all HNW practices cite referrals from existing clients (73%), developing relationships with clients' children (62%), and enhancing their technology stacks (51%) as the most important elements influencing their long-term growth strategy.

If you are interested in targeting the HNW client, you’ll have to consider how your practice meets their distinct needs and complexities.

1.   Custom Investment Portfolios 

HNW clients want to go beyond traditional asset allocation to maximize their return potential, generate income, diversify risk, mitigate taxes, and promote their values whether faith-based or to promote social causes. Whether you manage the assets yourself or use a Turnkey Asset Management Program (TAMP), offering institutional-grade options such as socially responsible investing, covered call option strategies, tax-loss harvesting, and alternatives can differentiate you from the competition.

• ESG Dividend Growth Portfolio
  Help your high-net-worth investors select sustainable companies prioritizing ESG practices that align with their personal values and minimize risk. This might include choosing companies that focus on sectors like renewable energy, clean technology, healthcare, and responsible consumer goods. Use this strategy to aim for long-term capital appreciation, dividend growth, and alignment with client values. Portfolio construction considers ESG ratings, analysis, and screening tools to identify suitable investments.
• Diversified Global Equity Portfolio
  Help your clients prepare for potential market changes by diversifying their portfolio with a mix of global equities across various sectors and regions. This strategy offers the benefit of broad exposure to various markets worldwide, reducing concentration risk and potentially enhancing long-term returns through access to different regions, industries, and economies.
• Fixed Income and Alternative Investments Portfolio
  This portfolio focuses on generating income and managing risk by combining fixed-income securities, such as bonds, with alternative investments like hedge funds, private equity, or real estate investment trusts (REITs). This strategy uses diversification, capital preservation, and potential income generation to support the transition toward retirement. The resulting portfolio might include a combination of fixed-income assets and alternative investments such as private equity, real estate, hedge funds, and commodities.
• Tax-Efficient Portfolio
  It might be ideal for your HNW client to optimize tax-sensitive investing strategies, such as tax-efficient funds or tax-loss harvesting. This kind of portfolio can help your client minimize tax liabilities and enhance after-tax returns. How you take advantage of tax laws for your clients depends on things like their family situation, whether they are a business owner, and if they have philanthropic tendencies.

2.   Private Wealth Management Portfolio

Consider how you can meet the needs of ultra-high-net-worth individuals (UHNWI) with a mix of traditional and alternative investments, private equity, venture capital, real estate, and other exclusive investment opportunities. Managing private wealth for UHNW clients often goes beyond investment management, tax planning, and estate planning to include additional services like risk management and legacy planning that are specifically tailored to the unique needs and objectives of the client.

3.   Holistic Wealth Management 

HNW clients need specialized support across their wealth solution needs, but they don’t want to seek out multiple points of contact. They want integrated solutions. They want to make one phone call when they are facing financial decisions or looking for financial advice. How do you make sure you are on the other end of that call?

Start by expanding your offering in ways you think will best fit the financial needs of your clients. Try to offer a holistic approach to wealth management so you can cover many of the bases when it comes to managing their money or assets.

Then, develop a network and leverage it often. Promote these professional relationships with your clients when they need specialized support from accountants, attorneys, bankers, etc. With the right centers of influence (COIs), you’ll get the call when the tables are turned and your services are needed. You don’t need to be all things to all people… you just need to be the financial professional your HNW clients call when they need help.

4.   Financial Advisor Technology 

Today’s HNW client expects operational efficiencies, sophisticated self-serve platforms, and state-of-the-art cybersecurity protection. According to the 2023 World Wealth Report by Capgemini, 76% of wealth managers say improving the client experience (CX) is vital to strengthening HNW engagement and reducing churn. To support better CX, 66% say they are prioritizing digital infrastructure upgrades and 48% plan to explore partnerships with third parties to maximize productivity.

It’s also important to note that 58% of advisors said they found it challenging to manage client expectations for 24/7 availability. Providing unified, synchronized channels that automate client support is one way technology can help bridge the gap. Advisors can also leverage technology to support proactive strategies for account management and reporting so clients feel looped in.

Stay in step with the latest digital tools by partnering with a firm that offers the scale and resources you need to continually invest in innovation.

5.   Withdrawal Strategies 

Outliving their assets is a concern for most investors, including millionaires and HNWI. An effective advisor will have the tools to create a comprehensive plan that includes balancing investment accounts, liquid asset allocation, portfolio management, and cash. To support your client’s needs, you may consider performing a cash flow analysis. 

You’ll need to include the development of a tax-managed divestment solution, the effects of IRA recharacterizations, and Social Security withdrawal scenarios to offer a complete picture. 

Working with a firm that offers end-to-end wealth management product solutions, expertise, and technologies—from accumulation to preservation to distribution—is imperative to establishing yourself as the HNW advisor of choice.

6.   Personal Risk Management 

Risk management is not just about insuring your client’s personal finances, primary residence, collectibles, health, or business—though insurance plays an important role. Risk also includes potential threats to your client’s reputation and vulnerabilities that could be exploited in their current financial management strategy. 

Risk is difficult to avoid completely, but your clients can reduce it or transfer it using insurance. Offering specialized personal risk management solutions involves:

• Understanding your client’s asset base
• Identifying potential areas of vulnerability
• Assessing your client’s risk tolerance
• Delivering solutions that include cost-effective life/health/liability coverage

As with many other services, effective personal risk management services are further complemented by outstanding customer service. Working with highly rated, financially stable companies is key to securing your clients’ future.

7.   High Net Worth Succession Planning 

Whether clients are interested in establishing a trust, creating an estate plan, or developing a charitable giving strategy, integrating these endeavors with investment management and tax planning is key to maximizing impact. Both Trusts, which protect your client’s assets and ensure your client’s wishes for the distribution of assets are followed, and charitable giving options, such as Donor-Advised Funds and Charitable Remainder Trusts, are impactful tax mitigating strategies as well. 

HNW clients are often concerned about the legacy they leave and the mark they make. It’s crucial to form early connections with any key stakeholders (including family members) who are positioned to take over the estate, or you risk losing the account after the transition. Working with one firm that offers the products, relationships, expertise, and support you need is key to effectively serving this market.

Attract and Retain High Net Worth Clients

There are myriad ways to serve the HNW market. The foundation of any successful client relationship is connection—a connection based on transparency, communication, shared values, and accessibility. Establishing and maintaining a meaningful connection takes time. 

So, how do you meet the needs of your HNW clients while running a business, engaging your community, prospecting for new clients, and fulfilling your CE requirements?

You don’t try to do it all by yourself. 

To accomplish so many things for your clients and your practice (without giving up your personal relationships and hobbies), you need to work with a partner. The solution is to work with a firm that delivers on every front while leaving you in control. A firm that gives you the resources and flexibility to succeed on your own terms.

AssetMark has been that provider for thousands of your peers, helping advisors like you outsource key parts of the business. We’ve been named Best TAMP for our comprehensive end-to-end support and sophisticated solutions for advisors. 

Our team can give you the resources you need to create the business you’ve envisioned and focus your time on revenue-building initiatives. Reach out today, and let’s discuss where you are now and where you’d like to be.