Swimming in affluent waters with HNW clients

Three-and-a half years ago, feeling underappreciated and underutilized at the financial planning firm where he was a partner, Rich Schuette, CFP, decided it was time to take his book of business elsewhere.

Within six months, Schuette had launched his own firm, Avalan Wealth Management, to serve high-net-worth clients in the Santa Barbara, Calif., area. And he hasn't looked back since. In the three years since, his assets under management have nearly tripled to almost $100 million, just one of the reasons he feels vindicated in his decision to try carving out his own niche in the high-net-worth market.

"I took a very conscious approach to targeting the affluent and have been very successful doing it," acknowledges Schuette. "It has been a matter of focusing my practice and positioning myself as a specialist, an expert advisor to the affluent."

But succeeding in such rarified air isn't merely a matter of claiming to possess the expertise to serve affluent clients. "Everybody, whether it's an insurance broker or a stock broker or even a CPA, says they have that expertise," says Irwin Gross, RFC, CFS, AIF, of Family Wealth Partners in Weston, Fla.

What separates advisors like Gross and Schuette from the crowd is an ability to substantiate that claim by delivering the high-end experience — the combination of a diverse skill set, a high-touch service model and, of course, a track record for producing results that meet or exceed expectations — that the high-net-worth set tends to demand from the professionals who advise them.

And the payoff? Having served a wide range of clients in her nine years as an advisor, Andrea Blackwelder, CFP, ChFC, co-founder of Wisdom Wealth Strategies in Denver, Colo., says working with the affluent brings a unique sense of fulfillment that can't be measured in dollars and cents. "You are better compensated [working with affluent clients]. That's part of it. But at this point in my career, and with my expertise, working with affluent people and the complex situations they bring is where it gets really fun."

If demand for financial advice among high-net-worth investors is any indication, there's plenty of that kind of fun to go around. But as Blackwelder, Gross and Schuette will attest, you have to work for it.

The Quick Study

"I think every advisor out there ultimately aspires to swim in these waters," Rich Schuette says of the affluent market. And he and his three-year-old firm aren't just treading water there, having built a solid base of mostly high-net-worth clients, many of whom are business owners and professional service providers (mainly accountants and attorneys), in a relatively short period of time.

Schuette attributes much of the early success to his work with a consultant specializing in the advisory space, CEG Worldwide, whose market research, strategic guidance and ongoing coaching, he says, have been indispensible to making inroads with wealthy clients. "I keep [CEG] on retainer," he says, "because what they do for me is just so valuable."

One thing they've done is help Schuette define and refine the service model that, he says, has proven instrumental in attracting high-net-worth clients. "The number one thing the affluent are looking for is strong service," he observes.

Avalan uses a high-touch, team-based model, where each client gets a customized experience, including at least 30 touches a year via email, phone, face-to-face meetings, etc., along with access to an advisory team assembled by Schuette that is comprised of "high-end" life insurance and property/casualty agents, accountants, trust/estate attorneys and the like. Schuette has two such teams in place and is assembling another to cater to the needs of specific segments of his client base.

The value those professionals bring is two-fold: Not only do they complement his wealth management skillset in the context of a team-based advisory approach, "they're a tremendous source of new business. They put me in front of their affluent clients because they recognize my expertise.

From a new business perspective, the quarterly high-end dinners to which Schuette invites several members of his professional team, a handful of his clients, and friends of those clients, are expensive (the most recent one ran $350 a head for 16 people) but productive, he says. "It's about great wine, great food and great company. We talk about life — no sales, no products whatsoever. There's never been one of those where I didn't bring back $1 million in new assets."

That's one way to stay buoyant in affluent waters.

The Client's Right Hand

Her ongoing work with mainstream clients of relatively modest means keeps Andrea Blackwelder grounded, but these days, she also savors her work with wealthy clients because, she says, it "allows me to stretch and really be useful in complex situations."

Four years after launching Wisdom Wealth Strategies, Blackwelder, who holds multiple securities and insurance licenses, has found solid footing in the affluent market, focusing on retirement readiness for a client base made up mostly of people over the age of 50.

Above all, she says, high-net-worth clients want an advisor who delivers "a creative, unique and specialized approach. Things that are most important to them are the level of expertise, the service they receive and how they feel about the value I provide."

That value, she explains, stems from a sense of trust, where "the client doesn't worry because they know I worry for them. They can shift that burden off their shoulders, onto mine. They know their financial health is personal to me." It also comes from her "actively trying to solve problems they maybe didn't even know they had — little pieces that improve their big-picture financial situation."

Where traditional investment strategies and portfolio models may suffice for the mainstream, the wealthy expect more, she says. "They want a customized experience. The models they can get from anyone.

Communication is key to that customized approach, she continues. "It's got to be on their level and on their terms, to make their life easier and better. I'll tell them, 'I'm on your timeline, your schedule; you're not on mine.' They really appreciate that."

They also appreciate their advisor taking an active interest in their families. That means "branching up and branching down" to become a valuable resource to a client's parents and children as well, oftentimes offering advice to them at no charge. Not only does that generate good will, it helps create a more financially stable family, Blackwelder notes.

Affording clients access to other skilled professionals is another difference-maker for the affluent. "If [the team approach] isn't initiated by the client, it's initiated by me," says Blackwelder. "I want to meet with their CPA, with their estate attorney. That's important."

All those factors go into producing a "referable experience," she explains. "It's creating an experience for your clients that they are excited about and want to share."

The Coach

He's registered to sell securities, commodities and annuities, and licensed for life, health and property/casualty insurance, but above all else, Irwin Gross wants to be known as a "wealth coach."

That moniker has served him well during his three decades providing wealth management services to the affluent, including the last six with the firm he cofounded, Family Wealth Partners, which provides "banking level" wealth management services, mainly to clients over 50 with $1 million to $5 million in assets.

Success in the affluent market starts with a consultative, multi-disciplinary approach, says Gross, whose firm manages about $140 million in assets across a client base of some 60 households. One-trick ponies likely will find themselves over their heads. "You need to bring a much more coordinated view — an understanding of tax law, of estate and legacy planning law, of the insurance marketplace and how it can truly serve clients and their assets. You have to take a personalized, more comprehensive and in-depth portfolio approach with each client. There's just a much higher level of integration for this type of client."

Such a skillset puts the advisor in a better position to "find gaps and opportunities" inside a client's portfolio, then to move to address them.

That approach demands that the advisor have strong experience working with other professionals — those the client may bring in and those the advisor introduces to the mix. Either way, treat others on the advisory team as allies, not adversaries, for as Gross points out, not only can these professionals help you better serve a client, they're also valuable referral sources.

Indeed, among the five new clients Gross's firm was in the process of onboarding early this year, each came via referral: one from a CPA, one from an attorney, one from the member of a board on which he serves and two from existing clients.

"When you do the right things for the right reasons and for the right people, you definitely create some affinity where you become known as a person who has a certain level of expertise, and that you are a person of your word. People know us as a firm that delivers exactly what we say we will deliver, when we said we would deliver it."

Exactly the kind of follow-through that delivers more affluent clients.