What Ultra-Wealthy Clients Really Want From Advisors

Mack, who serves on the UHNW Institute’s board and earned an advanced certificate in family wealth advising from the Family Firm Institute, describes the role of a family office leader as a quarterback.

“They need to have knowledge across the whole horizontal spectrum of wealth management [in order to] make investment decisions,” she stresses.

In the interview with Mack, who was a partner in TMP Worldwide and held senior positions at the Harris Bank, she reveals the No. 1 worry that keeps UHNW families up at night.

Here are highlights of our conversation:

THINKADVISOR: Most advisors are focused on obtaining high-net-worth or ultra-high-net-worth clients. How realistic is that?

LINDA MACK: The higher you go on the ultra-high-net-worth spectrum, the more that families want a customized model, not the standard. They want a more institutional solution, not a retail solution. They want more sophisticated financial planning, tax strategies and estate planning.

So what’s important is the kind of experience and expertise you need to provide. You need to be able to provide the counsel and advice they’re going to be looking for.

Advisors should be able to sit across the table from them as a partner to help them think through what they’re trying to accomplish and get the resources to accomplish that, hopefully from their own platform.

If you don’t have a happy client, you’re better off not trying to bring them in because they’re going to tell all their friends about their experience, and you’ll lose a lot of good will.

THINKADVISOR: What main concept can advisors learn from the so-called bible of the family office, “Family Wealth: Keeping It in The Family,” by James E. Hughes?

MACK: He said a family has four key asset classes: financial capital, which everybody pays all kinds of attention to; social capital; intellectual capital; and human capital. If equal attention isn’t paid, they won’t make it.

The punchline is: It’s not just about financial capital; it’s about intellectual, social and human capital as well.

THINKADVISOR: Family offices are skilled at getting the family member clients to open up. Please discuss that as applied to financial advisors.

MACK: You’ve got to have an ongoing dialogue, some frequency of contact. Always stay in touch and be mindful of what’s on your client’s mind.

When things get tough and the advisor doesn’t call the client and hold their hand across the phone, that’s really bad.

If something happens, the client wants to know you’re there with them, that it’s going to be OK, and you’re watching out for them.

THINKADVISOR: What else that’s critical can advisors learn from the family office?

MACK: It’s about the client; it’s not about [the advisor] and what’s in it for them. It’s what the client is trying to accomplish.

I talked to somebody last week who told me that an advisor was going to help his big family office client reconcile his checkbook. The person said, “Why in the world would you? Your assistant should be doing that.”

The advisor said, “Because it’s important to my client, and he trusts me.”

THINKADVISOR: Does the leader of a family office have only one point of contact, or do they interact with multiple family members?

MACK: The families we work with tend to be very large. They have a board of directors and a family council, which is the voice of the family members.

If the family office is small, [the leader is] interacting with everyone individually. With a lot of first-generation families, they may report to just the principal, the patriarch.

THINKADVISOR: How important is it to have a dialogue with the patriarch’s spouse?

MACK: You would be making a huge mistake as an advisor if you’re just talking to the wealth creator and not the spouse — who is probably going to be the survivor — and with the next generation. You won’t continue as the advisor if you’ve done that. They’ll get their own.

The advisors who really succeed are the ones who, for example, call the spouse when a quarterly report comes up and says, “We’ll be delivering this at the next meeting, but I’d like to go over it with you before then to see if you have any questions.”

It's a big thing not to neglect paying attention to the spouse or the next generation.

THINKADVISOR: Should an advisor try to draw out a quiet spouse in meetings?

MACK: Yes, a lot of it is asking questions and establishing the relationship as a partnership.

Also, if you aren’t asking for feedback from clients [and they’re dissatisfied], they’re going to be very polite but go someplace else.

Clients don’t like confrontations. They won’t tell you that they’re leaving, but then they’ll be gone and never come back. Research shows this continuously.

THINKADVISOR: Please discuss the “Expert Generalist,” as you refer to them.

MACK: This is the classic head of the family office. They need to have knowledge across the whole horizontal spectrum of wealth management. Importantly, they need to understand the interrelationships between accounting, taxes, investments, philanthropy [and so on] because you can’t make investment decisions without considering the ramifications.

The Expert Generalist needs to be the facilitator and coordinator of all the external advisors and providers.

They needn’t know the answers to everything, but they have to be really sharp and resourceful so that when the unexpected comes up — which it always does — they must know the questions to ask and resources to tap to get the information needed to make a wise decision or recommendation to the family.

THINKADVISOR: What keeps families up at night?

MACK: [The No. 1 thing] is: How do I hire an advisor I know I can trust, where it’s about me and not about them?

You should know exactly how your advisors are being compensated. They should be very comfortable having that conversation with you. If they’re getting a commission, that’s fine. We’re all grownups. This is business.

The kiss of death is that the advisor recommends something they’ll gain from but that isn’t in the client’s best interest.

THINKADVISOR: Should the advisor have an “How am I doing?” mindset?

MACK: Those advisors who are the most successful are in regular communication with their clients and want to get objective feedback from them: What am I doing well, what can I be doing better?

It’s the advisor’s responsibility to find out what the client’s expectations are. They can’t count on the client to do that.

It’s about sitting across the table from them and having them share their wish list and the advisor helping them solve for that successfully.