15 Comments That Reveal Hidden Information

2. “We got our taxes done. My accountant told me I paid my broker $30,000 last year.”

This is another way to learn the size of someone’s portfolio. Unless the person is constantly day trading stocks, it is logical they are on a fee-based platform.

Between the lines: We learned how much they have in investment assets. We also learned they use only one firm. It is logical they are paying no more than 100 basis points in management fees. If they paid $30,000, they have at least $3 million invested. It is consolidated at one firm, because they said, “I paid my broker,” instead of, “I paid $30,000 in fees.”

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3. “My home equity loan payments doubled last year.”

Friends might not want to talk about how much they owe, but they might mention how much they are paying. Rates have been rising since March 2022, bringing the federal funds rate from 0.25 to 5.25%. According to bankrate.com, average rates on home equity lines of credit moved from about 4.25% to 8%.

Between the lines: You should be able to roughly estimate how much home equity debt they are carrying. Assuming they reveal the size of their current payment and most of the payment is interest, the monthly amount times 12 is the annual payment. Dividing it by 8% should give an idea of the principal. This assumes they haven’t paid down the principal or withdrawn more money.

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4. “One of my parents is going into a nursing home.”

It’s amazing how the term sticks. We try to call them skilled nursing facilities or something with the word “retirement” in it, but the name “nursing home” still sticks. Two factors remain: No one wants to go, and it is going to be expensive.

Between the lines: They are not immune. Regardless of whether your client or friend is paying the bill, they are now aware this might happen to them someday. The best time to buy long-term care insurance is when you are young.

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5. “I want to make a name for myself in the community.”

This sounds so much better than, “I want to climb the social ladder,” or, “I want to run with the big dogs.” This is usually done through charitable giving. You join the right organizations, attend the right events and write checks.

Between the lines: They might want to have their own foundation. A donor-advised fund might work too. There are more ways to give money than simply handing over cash or writing checks. Giving appreciated stock with long-term capital gains is one example.

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6. “My partner and I …”

When you are chatting with someone for the first time, this can be a clue they are cohabitating but are not married. In the U.K., partner is a commonly used term for people in an unmarried relationship. But never make assumptions: Within my local high-net-worth community, there is a wife who introduces herself by name, referring to her husband of many years as “the man I am sleeping with.”

Between the lines: Who gets what when the time comes? There could be inheritance and asset-titling issues that ultimately need to be addressed. There may also be current tax concerns.

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7. “Our organization gives out a couple of scholarships every year.”

These might be funded in a couple of ways. It’s possible they set aside money from their annual cash flow, meaning fresh money needs to be found each year. Hopefully, there is a foundation or endowment that generates the cash.

Between the lines: Is there money in search of management? If an endowment or a foundation provides the income to fund the scholarships, there is likely an investment or finance committee in place. They might already use money managers, but they should be open to interviewing others.

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8. “We collect art.”

HNW individuals often have plenty of disposable income. Some spend it on their lifestyles; others seek to buy things that hold their value or even appreciate over time. You can find statistics showing how the art market has performed in recent years. Wealthy investors like the fine art market because it is considered countercyclical, not always following the direction of the stock market.

Between the lines: They understand alternative investments. There are insurance needs. There’s the question of liquidity, when you need cash in a hurry. For fun, watch this program from the BBC, “The Banker’s Guide to Art.”

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9. “My broker never calls.”

One of the benefits of asset-based pricing is also a drawback. The issue is recurring revenue. Advisors get paid as long as the client doesn’t leave the firm. It is easy for some advisors to neglect clients who sit quietly in the background. This might imply they are not getting attention.

Decades ago, our manager hired people to work with advisors and call their clients (from the advisor’s desk) to inquire about setting up retirement accounts. One advisor introduced himself, calling on behalf of [advisor name]. The client replied: “[Advisor name], is he still alive?”

Between the lines: They might be looking for a new advisor. Research shows that lack of communication can hurt client loyalty. Ask them, “In an ideal world, how often would you like to hear from your advisor?” Talk about your contact strategy.

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10. “I know a guy who knows a guy …”

Not all HNW individuals are sophisticated investors. Some may not understand what trading on inside information actually means. The person who tipped them them off could volunteer their name if they get caught.

Between the lines: You can help protect this client from himself. You would not use those exact words, but it’s worthwhile to hit the key points about what inside information is, how the government examines trades done immediately before news breaks and a stock makes a big move.

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11. “If only we met five years ago.”

This is when they mention they have worked with a competitor for years. They are in a committed investment relationship.

Between the lines: Establish yourself as the alternative. Sometimes it’s as easy as, “Let me know whether anything changes.” You might mention the wealthy tend to work with more than one advisor.

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12. “I trade for free.”

There are HNW individuals who think they are the smartest person in the room. They see the advisor as an order taker. They trade online or use no-load funds.

Between the lines: They do not trade for free. They are paying something. Either no one has told them yet, or they have not done enough digging. You can politely let them know about hidden charges, perhaps even reconnecting later to show them what no-load funds are costing them. The logic is to move the conversation away from paying versus not paying to, “What are you paying now?” and, “What will you get if you pay a little more?”

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13. “I’ve worked at (multinational) for my whole career.”

This often comes up in conversation. They are in upper management. They might be approaching retirement. It’s highly likely they have a concentrated position in their company’s stock. They might be buying through the firm’s employee stock purchase plan, or they might have unvested shares and options through their compensation package. The might own the stock in their retirement plan.

Between the lines: They might need a strategy for a concentrated position. Voice your assumption. Privately, you might ask how they protect themselves in a volatile market when they have so much wealth tied up in one stock. This could be an eye-opener.

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14. “I got a great deal on this luxury vacation.”

Wealthy people can be cheap. That’s how they stay wealthy. When they talk about the great price they got on a wine, vacation or new car, they are saying they appreciate value.

Between the lines: This might be a stock trader. There are still people who like the thrill of trading and want someone else to do the work. You might ask: “Do you own stocks?”

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