In the past several years, the wealth management and financial planning market has developed an approach commonly referred to as “private wealth management.” The typical client seeking private wealth management is generally defined as ultra affluent, with a net worth in excess of $20 million or more. Clients in this market seek teams of advisors to help them achieve their goals of passing their wealth and values to the next generation and beyond. The hallmarks of private wealth management services are highly customized and integrated multi-generational planning.
Clients in this market typically work with banks, trust companies, boutique investment firms, family offices and multifamily offices (MFOs). Insurance professionals often ask me how they can enter the circle of these other advisors. The opportunity exists every day, especially for the financial representative with expertise in insurance, an area few lawyers, CPAs or private bankers truly understand.
However, it is of paramount importance that we never start with a product or strategy when entering this market or when entering a client meeting. The key is to focus on the service and process you provide to help the client and the client’s other advisors (attorneys, CPAs, etc.).
It’s also important to focus on the particular model of private wealth management employed by the other advisors with whom you work and how your process links to their process. Most private wealth management models are organized as “hub-and-spoke” models. With the client at the center, the private wealth manager coordinates all resources for the client.
These typically include investment management, financial and estate planning, business planning, estate planning, estate settlement, trust planning and administration. Sometimes private wealth areas offer other services, such as real estate management, bill-paying and travel services.
Almost every model also incorporates an area where most insurance professionals integrate their services: risk management. Insurance has always helped meet certain needs of the ultra affluent. For example, insurance provides a death benefit that can provide liquidity for the estates of the ultra affluent to offset estate taxes and other taxes and expenses due at death. Educating the client and the client’s other advisors about how insurance serves their risk management objectives is critical in every step in marketing to this audience.
In addition, this market requires a collaborative and consultative approach. Many insurance professionals are familiar with the coordinating role in a financial planning setting. To the extent the insurance professional is called upon to play, and has the resources to fulfill, that role, he or she may be seen as the coordinator. However, in many cases, another member of the planning team (e.g. private banker, attorney or investment advisor) will be the coordinator.
Therefore, the insurance professional must network with private bankers, attorneys and other advisors likely to have these clients. Joining a local estate planning counsel or hosting study groups for these advisors are ways to meet the right group of advisors. Once you are introduced to a client in a planning situation, a consultative and collaborative approach is required.
We generally emphasize five “Cs” of success in serving the client and the client’s other advisors.
Credibility–Insurance professionals working in this market must be viewed as credible with respect to the customer needs and their area of expertise. Pre-work, research and planning are also a requirement to be a player in this market. Remember, you have been included on the planning team because of your expertise in a specialized area. More importantly, you have been selected because of your ability to clearly articulate your ideas, your process and how it benefits the client and the client’s team in the context of the overall planning.
Confidence–The homework you do along with your experience should lead to the confidence you will need to demonstrate to the high-net-worth and ultra-high-net-worth clients and their other advisors.
Collaborate–Having confidence will allow you to play on a team. These clients typically work with teams of highly skilled attorneys and CPAs. You will typically be asked to assume a role on the team and it will not always be as quarterback. This is especially true with multi-family offices (MFOs). Anyone who interacts with these teams must be able to work well together with professionals from different disciplines.
Connection–Being able to connect is important from two different perspectives. For the client, the ability to emotionally connect is just as important as the financial analysis or products. While this is true for all clients, it is especially true for HNW and UHNW clients. For the client’s other advisors in this market, insurance professionals must connect with their values as well.
Reputation is everything. That means providing value for the client, whether or not you ultimately wind up making a sale or commission. Don’t worry. If you’re seen as someone who cares about building and maintaining long-term relationships, future opportunities will always come your way.
Consistency–One nuance that really separates this market from the merely affluent is the need for highly personalized service. For instance, MFOs are designed for effectiveness rather than efficiency and require a high degree of personalization. Many offer concierge services and expect flexibility and adaptability from the financial professionals who serve them.
Your office must have a consistent process to ensure you are personalizing the service consistent with the client’s other advisors. In addition, your office needs to consistently connect with the client and the client’s other advisors. By having this process, you will distinguish yourself and enhance your opportunities in this market
Succeeding in the private wealth management market often includes partnering with the right organizations to offer the support necessary to enhance credibility, reinforce confidence, help collaborate, maintain connection and ensure consistency. Insurance companies are beginning to provide specially tailored services to assist insurance professionals with the process of helping their ultra-affluent clients and their other advisors accomplish those objectives. These services complement and expand upon traditional advanced marketing and encompass true end-to-end processes to help insurance professionals fulfill their roles in serving the ultra affluent.
Special pre-sale services created by insurance companies include suggested protocols for integrating with private wealth management teams and may include local point-of-service assistance from company representatives specially trained in the private wealth management market. Customized and concierge underwriting services focus on special care required so that ultra affluent clients have the best possible experience during the process. Finally, specialized policy review procedures created by some companies can help provide the updates regarding policy information and performance, which the client and the client’s other advisors need to perform annual reviews of the client’s plan.
Putting the client first, fostering the environment of collaboration with the client’s attorneys and CPAs, and providing the tools necessary to support this effort, lead to many opportunities for insurance professionals to serve clients in the lucrative private wealth management market.