The rich. They are everyone’s favorite prospect. Agents call. Advisors email. Cruise lines and jewelers send catalogs. Political parties seek donations. Why? Because they appear on lists. But lists aren’t perfect. Many wealthy people don’t show up.
Advisors must do research. Seek them out. Make new friends.
Now you are starting to building a HNW clientele.
What does wealthy mean?
On “Gilligan’s Island,” Thurston Howell III was the millionaire. Donald Trump, the celebrity and property developer is considered wealthy. Bill Gates is rich. That is our stereotype.
What Your Peers Are Reading
In most communities, wealth can be organized into four categories starting with High Asset, High Cash Flow prospects. They’ve got it socked away and keep earning more. Senior executives at listed public companies are a good example.
Low Asset, High Cash Flow prospects are your next wealth segment. They are great earners but haven’t put away that big nest egg. Engineers and scientists are good examples. They “work for someone else.” They aren’t good prospects for many wirehouse advisors because they have $250,000+ minimums. Insurance agents, on the other hand, have many ways to help people who can send monthly checks.
Thurston Howell III represents your High Asset, Low Cash Flow prospects. These are the “old money” families. Often money is held in trusts. Sometimes the wealth isn’t money but property, jewelry or antiques. They can’t easily spend it. They own everything they need and rarely throw anything away. They are described as “cheap.” Their main focus is passing the money to the next generation. Estate planning plays a big role.
Some people don’t neatly fit into boxes. The “under the radar” wealthy are often people who make money legally and quietly but prefer you know as little as possible. They have diverse needs.
What about Low Asset, Low Cash Flow wealth? That’s the final possible combination. This category likely represents once-wealthy people who spent the family fortune, or newer arrivals who flaunt status symbols and finance their lifestyle on credit. Might they make good friends? Yes. Are they good prospects? No.
Don’t’ start searching until….
There’s plenty of wealth living quietly around you. Determine your geographic market. It’s where you live or where you work. If you live and work close by, chances are your office location is the focal point. If you commute daily from a wealthy suburb, you might choose to build your business close to home. Why? You play golf nearby. Your children attend the local school.
You may say, “Does this mean I can’t take clients from anywhere? I’m licensed for five states!” If business lands in your lap, take it. Your prospecting strategy is about finding the areas seriously wealthy people are likely to call home, searching out prospects within the wealthiest 2–5 percent of your geographic market, identifying where they live and populating your local market.
Finding high asset, high cash flow prospects: senior executives
Senior executives at listed public companies represent the jewel in the crown. You want firms with their headquarters nearby. If you work in New York, Los Angeles or Dallas you say: “We’ve got those.” What about the agent or advisor in Wisconsin or Idaho? “There aren’t any around here!”
Wrong! Business journals often list the Top 25 local firms. Many smaller ones are located nearby. Several websites enable local searching. The results are surprising. Grand Rapids and Western Michigan have about 43. Orange County, Calif., has about 176. San Antonio has 15. Buffalo and Western New York State, 46.
Your rationale is simple. People who are high up enough in the firm to be listed in the company’s annual report are doing well. Think salaries, bonuses and stock options. You want names! But how?
Secure a copy of each firm’s annual report and find the page listing directors and officers. The average firm has 30. Smaller companies have less, banks more. How do you get the annual report? Writing and asking works, but its so 20th century! Visit the firm’s website. It’s usually available as a viewable pdf document.