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4 Questions to Ask the Ultra-Wealthy Client

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The ultra-high net worth (UHNW) segment often is sought after by advisors and service providers because these clients are thought to be both prestigious and lucrative. While there are many firms that have the experience to understand the complexity of these families and model their services accordingly, many rush in believing they can act like their HNW and mass affluent counterparts.

For almost two decades we have lived the day-to-day complexity of thousands of these families managing the flow of information about their wealth. This process will help you map the technology services that can address these clients’ needs.

The Wealth Continuum

Not everyone is born wealthy — many become wealthy. Where they are in the wealth continuum drives their objectives and subsequently what they expect from their advisors and support services.

New wealth comes quickly to some families. Often less informed about managing wealth, they are focused on not squandering what was hard earned and may not yet have developed a trusted set of advisors to help them navigate the event. Servicing these clients is often an educational process with significant “hand-holding.”

Wealth creators are actively engaged in new ventures, investing and other wealth-building activities. Often these activities are focused on the strategies that created their wealth. These families may have sophisticated support teams to help execute on their strategy, be more risk tolerant and tend to focus on portfolio management and liquidity strategies aligned with their desire to fund further growth.

Wealth preservers have achieved a level of wealth that they may deem adequate to fund their longer-term or even life objectives. Portfolio strategies generally focus on sustainable income flows, tax efficiency and estate planning.

Wealth stewards have been given the responsibility of dispatching the wishes of earlier generations and are often focused on philanthropic activities and supporting the needs of larger multigenerational family structures. Wealth creation may no longer be a primary objective and the family’s support infrastructure are focused on ensuring the goals of the original wealth creators and the family members responsible for governing these objectives are executed on.

Portfolio Size and Bias

The size of a portfolio provides a window on client needs, but by no means is a definitive indicator. What we do know is that at higher asset levels the advisor and support teams for the client are generally more sophisticated and they require a more structured process, audit and governance.

UHNW portfolios are complex. They often contain between 30% and 70% illiquid holdings in real-estate, private equity, hedge funds and other business interests.

There is often a strong bias in these portfolios for those asset classes that the family believes has helped generate their wealth over generations. For example, if the family has generated their wealth principally from real estate, the portfolio would be heavily weighted as such.  Those whose wealth had come from a business or employment would tend to have a more balanced portfolio.

Here are four important questions advisors should ask when addressing each family’s data and technology needs:

1. How is the family structured and what trends are driving decision making?

The family structure plays an important role in identifying best practices and meeting client needs. Is the client an individual, a broader first-generation family or a multigenerational family? Are they experiencing a changing of the guard? Are there demands for new technologies and ways of managing the family’s business to better meet their digital needs? 

2. What is their investment management strategy?

Whether managed by family members, hired professionals or outsourced, the infrastructure for making and monitoring investment decisions impacts many elements of service. Self-directed strategies often drive bespoke ways of looking at investments, while arguably more mainstream investment professionals tend to adhere to more standard conventions.

3. What is their operations strategy?

Understanding the operation support a family will need is critical. Is the family supported by an individual, a structured family office or some type of outsource, including a multifamily office or other advisor structure? Is the business of the family office restricted to managing and reporting on investments or does it included “business management” functions such as paying bills?

4. What is their technology maturity?

How the family thinks about technology, automation and streamlining is a key element of what is possible. Is the family operating on spreadsheets? If so, are they satisfied with that model or do they have aspirations to automate, streamline and implement better control systems?  Or have they already built a scalable infrastructure to manage information, reporting, communications and workflow?

UHNW families have special needs, and successful UHNW advisors and service providers both understand and cater to their unique requirements. While these families benefit from most technological developments, the bespoke nature of their strategies requires flexibility and trusted partnerships that understand their challenges and objectives. This framework helps advisors and technology providers calibrate a service that best fits clients on any level of the wealth continuum.

Robert Miller is CEO of Private Client Resources, which was founded by a group of private clients in 2000 to deliver information management services tailored to wealthy families. Since then PCR has established a 17-year track record of delivering a trusted outsource of complex UHNW data aggregation and client reporting focused on the unique demands of wealthy families and their advisors.