Man with binoculars (Image: Shutterstock)

Remember old-school prospecting?  When I was a financial advisor we found people who would listen to us, got them interested and later learned about their asset level. That was a bottom-up approach. A top-down approach makes better sense.

Do systematic research to identify prospects within the wealthiest 2%-5% of your local market.  Get close to them. Become part of their world. Once they get comfortable, they ask you about business or you bring it up. Either way, you know they should have significant assets. This all starts with identifying the right prospects.

(Related: Using Wine to Get Your Point Across to Wealthy Prospects)

Four Types of Wealth

Many advisors bought lists. Other people bought the same list. Then the Do Not Call rule arrived. The people on these lists hurried to sign up. There’s lots of the “invisible rich” around.  They have money, yet fall through the cracks. They aren’t on lists. You must build your own.

I wrote my book “Captivating the Wealthy Investor” and designed my seminars around identifying, meeting, cultivating and converting four types of wealth.

  • High Asset, High Cash Flow – They’ve got it made. What more could you want?
  • Low Asset, High Cash Flow – They earn a great salary but don’t have a bundle stashed away yet.
  • High Asset, Low Cash Flow – The “Old Money.” They’ve got it, but it’s tied up.
  • Under the Radar – They don’t neatly fit into a category. They made their money legitimately, but they don’t talk about it.

How About an Example?

Consider Carlsbad, California, a wealthy community near San Diego. Its population is about 115,330. Its median income is $97,145. Compared to California’s median household income of $63,783, it’s pretty wealthy.  Can we get close to identifying prospects within the wealthiest 2%-5% of the Carlsbad population?

High Asset, High Cash Flow Wealth

The first logical candidates for this category are senior executives at listed public companies.  Although 85 public companies are headquartered in the San Diego area, 12 are located in Carlsbad. How do you find their names? The website crmz.com is owned by Credit Risk Monitor. They sell data, yet also have a searchable database of listed public companies (including ticker symbols) they cover, organized by state on their website. Finding annual reports online and identifying officers and directors is pretty easy. Expect to find an average of 20 at each company. For 12 companies, that’s 240 people.

(Related: The Ten Commandments of Prospecting)

Certain local businesses can be lucrative. Some, like dry cleaners, auto body repair shops, florists and landscapers might be considered cash cows. Other high-volume businesses like liquor stores, gas stations, car washes and convenience stores often do well. Professionals who own businesses in fields like plumbing, auto mechanics and electricians bill hourly. Carlsbad has about 571 of these businesses.

Low Asset, High Cash Flow Wealth

Then you have people who work for someone else. They have great cash flow. The Bureau of Labor Statistics produces excellent statistics on top-earning professions in various metro areas.  No prizes for guessing the medical profession fills most of those slots in most cities. Carlsbad has about 1,102 physicians, surgeons, pharmacists, psychologists, dentists and others. This information comes from publicly accessible state databases of licensing information. The website searchsystems.net is a good resource, with access to more than 55,000 public records databases.

Professions such as CPAs, attorneys, engineers and architects also need licenses. Carlsbad shows 2,358 of them. By the way, these databases often include retired professionals.

High Asset, Low Cash Flow Wealth

Old money is often philanthropic. They consider it a public duty. People aspiring to this category enjoy the recognition it brings. Cultural institutions like museums, zoos and the symphony usually produce annual reports listing donors or post them prominently on signs thanking this year’s contributors. Often these annual reports are viewable on the institution’s website.  Carlsbad has them, but they aren’t listed here.

Under-the-Radar Wealth

Not everything fits neatly into a category. High earners who have been recently laid off in a downsizing may have significant retirement assets to roll over. Worker Adjustment and Retraining Act (WARN) notices let you know which local companies have announced layoffs in advance. You or your clients may know people there.

There are at least six military bases in the greater San Diego area. San Diego has one of the largest U.S. naval bases in the country. There are at least six bases in the area. Military bases often attract a concentration of government contractors.

Being a certified government contractor can be a good business. The folks who paint lines on runways or repair fences on military bases can do well for themselves. They are accessible in a public access database, the System for Awards Management or Sam.gov. There are 385 of these contractors in Carlsbad.

What Have We Learned?

Businesses are run by people. Professionals and small business owners are people.  We found the following for the Carlsbad area:

High Asset, High Cash Flow Prospects

  • 240 senior corporate executives
  • 571 established successful business owners

Low Asset, High Cash Flow Prospects

  • 2,358 licensed professionals
  • 1,102 licensed medical professionals

High Asset, Low Cash Flow Prospects

  • Charitable donors (not counted)

Under the Radar

  • 385 certified government contractors

Total: 4,656 prospects, or 5.2% of the population over age 18.

Compliance Considerations

At this stage you’ve identified prospects. You might be considering calling them, although meeting them socially, seeing “who knows who” among your client base, school alumni and LinkedIn connections will probably be more efficient. There are compliance considerations:

  1. Check names vs. the national and state Do Not Call lists;
  2. Check national and state Do Not Call policies.
  3. Comply with the rules of the sites and sources of names.
  4. Find the name from more than one source.
  5. Respect all information as personal and confidential.
  6. Secure approval from your branch or compliance manager before starting prospect research strategies on the Internet.

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Bryce Sanders is president of Perceptive Business Solutions Inc. He provides HNW client acquisition training for the financial services industry. His book “Captivating the Wealthy Investor” can be found on Amazon.