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Life Health > Long-Term Care Planning

3 Things the Wealthy Need From Their Advisors

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Financial advisors pursue their own version of celebrities: high-net-worth individuals. We want them as clients. We want them to invite us to their house for parties. We want our children to play with their children. We don’t stalk them, but we sure want to get close to them.

Lots of articles address how to get yourself into the same room. Different ones look at how to get a conversation started and what to talk about. You are still missing something. Why should they want to do business with you? What’s in it for them?

That’s not a social question followed by “Can I freshen up your drink?” It’s a serious one, where you put yourselves in their shoes and give it a lot of thought. Once you have some answers, you can find ways in future encounters and business conversations to bring it up. It’s that square peg, square hole thing.

1. It May Sound Obvious, but …

Years ago, I interviewed a former North American CEO of a NYSE-listed company. He told about how he had gotten his financial advisor referrals to about 50 similar C-suite executives. Obviously, many were at other firms. He explained the advisor would ask if he knew a certain person. If so, could he put the two of them together. There was also one more degree of separation. “If you don’t know them, do you know someone who does?” OK, so the guy had a charismatic personality. Why would he do this for the advisor?

The fellow added, almost as an afterthought: “Obviously the advisor needs to have made you money.” He explained, when he would talk to a peer about the financial advisor, the first questions would usually be: “What makes him so good? How much money has he made for you recently?”

Yes, making money on stocks sounds “old school.” Yet when dealing with Type A personalities, they are bottom-line oriented. They want to be able to say: “Yes, my advisor has made me money.”

How might it sound: Your referring friend might say: “Yes, she has made me money. She’s done it over time, too. She stays on top of things.” They would determine if they would go into detail with specific examples.

2. Provide Specialized Knowledge

If you own a car, you could change your oil if you wanted to do it. You could probably make minor electrical or plumbing repairs. But you don’t. You bring in a qualified expert, a mechanic, electrician or plumber. Why? Because they possess relevant knowledge. When the car dealership changes your oil, they usually do a 40-point inspection. They uncover problems you didn’t know you had, like the bubble in the tire’s sidewall or the worn brake pads. You would have missed those problems because you weren’t looking for them.

Insurance is a complicated product area. There are different costs, features and benefits. It’s difficult to compare side by side. You don’t know the right questions to ask. Some things, like long-term care insurance, are entirely beyond your base of knowledge.

They need a subject matter expert. This is why busy executives are often considered great clients. Once they are comfortable and trust you, they rely on you. In their line of work, they are used to hiring consultants when the don’t have the time or expertise to address a specific problem.

Investing is another good example. The stock market has traditionally moved in cycles. People don’t know how long those cycles will last. Although past performance is no guarantee of future results, a long-experienced advisor may have seen similar cycles before. They know what happened when a bull market coupled with a low interest rate environment moved into the next cycle back then. This experience has value.

How might it sound: You asked about long-term care insurance. That’s an area I know a lot about. I’ve earned a CLTC, or certification for long-term care. I’ve helped other people in similar situations. I may be able to help you, too.”

3. Get Them Organized

Lots of people are disorganized. CPAs talk about “shoebox accounting” when individuals or business owners show up with a box of receipts and papers they think might be important. There are investors with an online account, one or two investment accounts with live advisors, a 401(k) at work, an IRA with a bank and a couple of orphaned retirement accounts. Add in the liability side and they have little idea where they stand. They need someone to get them organized. A financial planner can help solve this problem, but consolidating as many accounts as possible under one roof makes sense.

It’s a nightmare for their accountant, too. They need to reconcile stuff. Time is billed by the hour. With taxable gains and losses in multiple accounts, the left hand doesn’t know what the right hand is doing.

In this example, the advisor is providing structure. They are taking a burden off the client’s shoulders and simplifying their life.

How might it sound: Put all your statements into a shopping bag. Bring them into the office. We’ll get you organized.”

It’s easy to think of HNW individuals as “otherworldly celebrities” living a different lifestyle. In your local area, they are probably closer to normal people, with needs and motivations similar to your own.

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