5 Tips for Attracting UHNW Clients
NOTE: If you’re a new financial advisor, make sure you check out Your First Year As A Financial Advisor, where I reveal several things every new financial advisor ought to know.
What Is An UHNW Investor?
High net worth (HNW) and ultra high net worth (UHNW) are classifications used by the financial services industry to denote an individual or family with a high net worth.
There's no precise definition of how rich someone must be to fit in this category, but the most commonly quoted figure for membership in the high net worth categorization is at least $1 million in liquid investable assets.
UHNW is generally regarded to be worth much more. According to CNBC, there are now 145,000 U.S. households worth $25 million or more and more than ten million millionaire households.
To put that in perspective, one out of every thirty households will be worth a million or more. On the other hand, only about 1 out of every 2,200 households have reached $25 million or more.
I prefer to use statistics, which means I will look at percentiles. Here are household assets ranked by percentile, from PriceMetrix Insights:
Knowing this, how can you attract these UHNW investors? Let's start by understanding their characteristics...
Traits of UHNW Investors
To find information on UHNW investors, I went over to the Spectrem Group. Spectrem did a lot of high-quality research on UHNW investors, and here's what they found:
Here are some more facts, mostly from The Wealth-X and UBS World Ultra Wealth Report, which compiles and analyzes information about UHNW investors:
The most popular hobbies among UHNW investors are sports (golf, skiing, football), philanthropy, hunting, fishing, education, and aviation. Among women specifically, the top hobby is philanthropy.
Among both men and women, the most popular philanthropic cause is education, followed by health.
Another finding is that they spend $1.1 million per year on luxury goods. Their top purchases (in order) are:
Getting any ideas yet?
How You Can Attract UNHWs...
The most important thing you should understand about marketing to wealthy prospects is that they are looking for quality and they’re willing to pay for it. They look for value instead of being immediately turned off by sticker price. If you can stack the value in front of them, they will seriously consider you.
For example, I have a really nice computer keyboard. It’s made by a company called Das Keyboard and it’s one of the best keyboards you can buy.
(Seriously, once you buy a nice mechanical keyboard, you’ll never want to go back.)
Anyway, I bought it for $200 and I happily paid that price because I understood the value I was getting in return. This is true even though you can type “computer keyboard” into Amazon right now and buy a keyboard for less than twenty bucks. I wouldn’t do that because I would rather buy quality. I would rather have ONE keyboard that I can buy once and never have to think about again rather than having a piece of crap that constantly breaks.
The same is true with millionaire clients and their financial advisors. They are looking for competent professionals. One of the best ways to stand out to them is to provide information. This is why having marketing collateral is so important. Having marketing collateral in the form of blog posts, emails, content, etc. is a way to give information and demonstrate that you care about your market.
HNW and UHNW investors don’t mind putting in the legwork to find the right financial advisor for them. Because if they’ve got a specific problem, they want the best. They would rather solve that problem and move in. When it comes to their money, you better believe they’re going to want a lot of information before they feel comfortable making a decision. And that’s okay - if you know this in advance, you will have an advantage because you can structure your marketing plan around providing information.
Examine Your Beliefs
I also want to point out that there’s a specific type of call reluctance called “social self conscious” call reluctance. People who suffer from this form of call reluctance are intimidated by people who they perceive to be better than them.
When it comes to financial advisors and UHNW clients, this form of call reluctance is almost always directly related to how much money a prospect has. If a prospect has $10 million, the financial advisor may feel some discomfort. Or even worse, the financial advisor won’t even try to reach out to millionaire prospects because of this intimidation.
Understand Their Specific Needs.
No financial advisor can (or should) try to serve everyone. Each niche requires a different suite of services, level of expertise, etc. If you don't have a niche, take a look at my articles on why you need a niche and best niches for financial advisors.
Within the HNW investor niche, their needs include estate and tax planning, wealth management advice, family governance advice, and philanthropic planning. In fact, philanthropic planning should be one of your areas of expertise – remember how most UHNW investors give to charity? That's some food for thought.
Bear in mind that these clients tend to have more complex financial situations. Many UHNW clients employ a broad wealth management focus, with taxes being one of the biggest hot buttons.
Focus On Your Referral Process.
Finding UHNW investors on your own is difficult, but once you've found a few, you have a gateway to quality introductions. This is because HNW individuals tend to hang out with other HNW individuals. They live in the same communities, vacation in similar venues, and attend similar social events.
Every happy UHNW client you have is a gold mine of future business. A referral from these individuals will be worth more because their peers will look to them for wealth advice. If someone with a net worth of $25 million tells a friend, who is worth only $3 million, to use your services, the person worth $3 million is more likely to listen.
With this level of clientele, you should make referrals a big deal. Thank your referring clients and be willing to spend more (both time and money) to show them that you appreciate them.
The UHNW market is not an easy one to break into, which is why you should treat the referral process with the respect it deserves. If you want to get more referrals, check out 5 Reasons Why You're Not Getting Referrals.
Go Where They Are.
Cold calls, direct mail, and online marketing are all proven ways to build a phenomenal book of business. But when it comes to UHNW investors, these marketing methods don't serve financial advisors as well. After all, high net worth investors aren't farmed. They're hunted. That's why you have to go where they are.
Fortunately, you have some clues to help you figure out where they might be. You now know that the most common cause supported among UHNW investors is education. This means you'd be smart to show your face at university fundraisers and education-focused charities.
If you are a college graduate, getting involved in your alumni network is an incredible way to build your business. As you go to more events and meet more people, you will begin to see the key players.
UHNW investors demand quality. Once again, I refer to the statistics; if they're spending over $1 million in luxury items each year, you better believe they demand the best of the best.
This means you should be developing a brand that is well-designed and highly-positioned. Start thinking about different high-quality brands and how you can immediately (both consciously and unconsciously) tell the difference. Your prospects can tell the difference just like you can so invest in quality marketing materials to attract them.
Speaking of quality, it's worth mentioning that your HNW and UHNW clients are willing to pay for the greatest value.
The PriceMetrix study also found that advisors who priced their services between 75 and 100 basis points of invested assets had the same amount of production directly from HNW households as those who priced between 50 and 75 basis points. There's no difference there, so you might as well be on the higher end.
However, when the price went below 50 basis points or more than 100 basis points, the number of HNW clients dropped off. That means that HNW investors are not sensitive to price – they are value sensitive. You want to be in the value range.
Be Willing To Play The Long Game.
You will not attract UHNW investors overnight. The previous four tips all take time, but the effort and money invested will be more than repaid once you get one or two clients.
In 1970, Harvard sociologist Dr. Edward Banfield wrote a book called The Unheavenly City, and it described one of the most profound studies on success ever conducted.
Dr. Banfield wanted to find out how and why some people became financially independent over the course of their working lifetimes. He found that family background, education, intelligence, connections, and so on didn't matter nearly as much as one thing...
"Long time perspective."
That's what Dr. Banfield called the attitude that was the single largest determinant of success. The people who became the most successful in life were the people who took the future into consideration while planning and making decisions.
This same idea can be applied to your career as a financial advisor; if you're willing to invest in yourself now and put the work in now, you can reap the rewards later. That's really how you attract UHNW clients. There's no magic bullet (that's for sure) but you can certainly maximize your chances of success by playing the long game.
ALSO READ: 51 Referral Marketing Tips for Financial Advisors
Recommended Books for Marketing to UHNW Investors
If you want to further your learning on UHNW clients, I suggest reading the following books. Most of them aren’t targeted specifically for financial advisors, but they’re chock-full of valuable advice that you can transpose to your practice.
Selling Luxury: Connect With Affluent Customers, Create Unique Experiences Through Impeccable Service, and Close the Sale
This book will provide you with the fundamentals of luxury sales by teaching you how to adapt to your customers in a deeper way.
Even if you’re already advanced on the subject, reading this will give you a nice refresher on the basics, so it’s a good volume to keep in your library. One of the things I enjoy the most about this book is the lack of unnecessary jargon - it’s crisp and clear and leads you straight to the point.
Exceptional Service, Exceptional Profit: The Secrets of Building a Five-Star Customer Service Organization
Praised by Seth Godin himself, this book will take you from simple financial advisor to a 5-star service your clients can’t get enough of. Many call it the ‘Bible of Customer Service’.
It’s concise and to-the-point, making every page valuable. You’ll find yourself reading every single page and learning something from it.
It’s also made quite entertaining through case studies and anecdotes that provide concrete examples of how to apply what you’ll learn.
Marketing to the Affluent
If you want to understand the real needs and desires of the wealthy and how they differ from the less-affluent clients you may already be dealing with, this book is for you.
What is great about this book is that it’s targeted for the financial service industry and provides a peek into the trends, buying habits, preferences, and unique characteristics of the affluent population of America.
101 Insider Secrets for Marketing to Affluent Women
As you guessed from the title, this one is specifically aimed at selling to wealthy women. Many financial advisors make the mistake of applying the same sales techniques they use on men to women as well.
This book will teach you how to not only market your services to affluent women, but to retain their services as well. By learning effective communication techniques with insider tips and techniques, you’ll be on your way to gaining the trust of this often forgotten half of the wealthy population.
No B.S. Marketing To the Affluent: No Holds Barred Kick Butt Take No Prisoners Guide to Getting Really Rich
If you don’t have the patience for touchy-feely self-help and success books, you’ll love this volume. To get wealth, you must target the wealthy - end of story. This book will teach you exactly what to do when you aim to sell to the affluent.
With strategies like raising your rates and adding exclusiveness to your services, you’ll learn how to make substantial gains as a financial advisor. You’ll also get detailed information on different wealthy ‘customer personas’ and learn how to target their hidden fears and insecurities to close more deals.
Selling to the Affluent
As a follow-up to his best-selling book The Millionaire Next Door, Dr. Thomas Stanley teaches you how to persuade any wealthy client to purchase from you. It provides a complete roadmap of the sales process needed to sell to several demographics within the affluent community.
This author’s style is easy to read and provides many creative techniques to get those UHNW clients for yourself. Definitely do yourself a favor and read his other books as well!