The Ultra-Wealthy Are Just Like Us: They Need 'a Community of Advice'

"Serving the UHNW is a great opportunity to ... be the most important touchstone as the family navigates not only the present but the future and their future's future," Bates says.

According to The Wall Street Journal, the UHNW "is now a huge force in the economy. ... The number of Americans worth tens of millions and hundreds of millions of dollars has boomed."

The leaders of this guarded group crave discussion, if not camaraderie, with other big-wealth creators, Bates maintains. Often, those who have sold a business miss their former network and need emotional support from others in their same position.

"First and foremost," Bates stresses, "they are human beings with real concerns, real challenges."

Bates has been with Bernstein in several Private Client executive posts since 2004. He previously served in the Office of the U.S. Trade Representative in the Clinton administration.

In the interview with Bates, who oversees family office services in addition to individual UHNW clients, he notes how he and his team create interaction among these by bringing together leaders for gatherings at quiet, distant locations.

Here are excerpts from our conversation:

THINKADVISOR: What asset level constitutes ultra-high net worth at Bernstein Private Wealth?

AARON BATES: Clients who have invested $20 million or more with us. Our family office services team focuses on clients with more than $100 million in liquid net worth.

THINKADVISOR: What's most important for an advisor to keep in mind when working with this demographic?

BATES: No. 1, regardless of the [large] amount of [money] they have, they're first and foremost human beings with real concerns, real challenges and complexities that go well beyond that of a typical individual.

Secondly, they prize discretion.

Third, the wealth creator wants the ability to expand their network so that they feel less alone. And the UHNW prize peer-to-peer learning and engagement.

Serving the UHNW is a great opportunity to advise across multiple generations and be the most important touchstone as the family navigates not only their present but their future and their future's future.

THINKADVISOR: How do advisors build a trusting relationship with super-wealthy families, who are wary in general?

BATES: Begin with the right asset allocation and the right asset locations.

We create a community around these families through, for example, our leadership accelerator program, designed for next-gen family members to leverage peer-to-peer learning to be in a better position to take on wealth leadership.

In addition, we have our Summit Series, which gathers the families in remote locations to introduce them to one another and help reinforce the community of advice.

THINKADVISOR: Tell me more about that.

BATES: Oftentimes the [UHNW] are very lonely, particularly the first generation who no longer have the network of people they had when they were [creating] the wealth.

If you've been a business owner and define your community as other business owners and then sell your business, it's very hard to ask for advice on how to handle that emotionally.

You really need to seek out a collection of individuals who had similar experiences. We create that community through our Summit Series.

THINKADVISOR: What are the challenges in working with these clients? Are they very demanding? Do they think they know all about investing and don't need much help?

BATES: No, no. But the challenges advisors face are different because they're thinking about things through a prism of the lifetime of their wealth, not just their own lifetime.

So it's about helping to educate their children on how to be stewards of the wealth and how to transfer the values that [created] it. It's about strong governance to ensure that the family stays together, and about complex estate planning and developing a philanthropic arm of the family.

THINKADVISOR: How can these folks avoid falling into the pit of "shirtsleeves to shirtsleeves in three generations," as that saying goes?

BATES: What families are doing today that perhaps they didn't do 30 or 40 years ago, is to have intergenerational and intragenerational dialogues around expectations, ensuring the family understands that their wealth is meant to survive across multiple generations.

This includes having rules in estate planning and governance documents stating when the children will have access to the funds and what those funds are for.

Also, families are hosting annual meetings to review how the assets are performing and what decisions the family members are making.

THINKADVISOR: Why is the UHNW segment the fastest growing of your business?

BATES: No. 1, the [entire] UHNW space is growing: If you look at the demographics and data, the ultra-high-net-worth segment is one of the fastest growing.

For us, it's the fastest growing because we've taken 60 years' experience in advising some of the world's most complex families and put it on a singular platform that clients can access through a singular advisor or advisor team.

THINKADVISOR: Why are there more UHNW families now?

BATES: They're growing at a faster rate than high-net-worth families, especially given the rise in business owners and entrepreneurs since the pandemic, which has resulted in really massive wealth creation.

A confluence of events occurred over the last several years: dramatic increase in the amount of M&A activity; a large number of new businesses that started that are now ripe for sale; and the explosion of technology, most recently AI, which has driven new business opportunities.

And then you have, obviously, the dramatic rise in the overall markets.

THINKADVISOR: To what extent do you help your UHNW clients with tax strategies and tax planning?

BATES: This is a core part of what we do. We have a 40-person team of wealth strategists that help to advise clients on both — whether it be pre-transaction planning prior to selling a business, or modeling, or guiding them on strategies they can implement to minimize their taxes through liquidity events.

THINKADVISOR: To what extent do you provide high-touch luxury concierge services?

BATES: We have an ultra-high-net-worth servicing desk that our advisors can leverage. This is a centralized team designed to have very little turnover for consistency of servicing to ensure they're an extension of the advisor.

Through the team, we've formed a partnership team whose job it is to understand what clients need — whether it be concierge services, art advisory, art lending, cybersecurity services — and they'll find the optimal partner.

THINKADVISOR: How do you acquire UHNW clients?

BATES: Our advisors benefit from centers-of-influence professionals in the community that surround these families. Also, the advisors are ensconced as leaders in their community, so they're often already known by the families.

Thirdly, people looking for the thought leadership we're providing through our blogs and research will oftentimes get in touch with us when they've read a piece.

THINKADVISOR: How do you acquire advisors to serve your UHNW clients?

BATES: We have a robust training program for advisors to be in a position to succeed in the alternative part of the business.

And we're recruiting advisors with experience helping families plan for and live with the complexities that come with having [great] wealth.