Want HNW clients? Build acumen & networks 

Who doesn’t want high net worth (HNW) clients? In a fee-based model, clients with millions of liquid investable assets represent good margins, a significant addition to your book, and the chance to grapple with some complex financial challenges. It’s one thing to want those clients, though, and it’s another thing to capture them.  

Tim Brisibe explains that taking on HNW clients typically involves taking on a high degree of financial complexity. The VP of tax and estate planning at Mackenzie Investments notes that in taking the jump from mass affluent to HNW clients, advisors tend to take on more complex income and asset holding situations. They tend to take on different expectations, too, including the expectation that they have a deep professional network and they can assist with an efficient transition to the next generation.  

“Vast wealth comes with all kinds of complexities,” says Brisibe. “For some HNW families, there could be a business involved. Do you have to take that into account when you’re planning and onboarding because at some point a transition will take place. We also want to help with strategic philanthropy, planned giving, and potentially introduce donor advised funds. With an increase in wealth comes an exponential increase in complexity and the demand for a more sophisticated approach from advisors.”  

Perhaps the most clear distinction between HNW and mass affluent client classes is that HNW clients are more likely to be business owners and entrepreneurs. That means their income will likely be more complex than just T4 employment income. Managing how that income is paid and the tax implications of that can be a crucial part of working with these clients day to day.  

There are long-term implications to business ownership, too, as many clients may have personal or professional corporations that can be used for retirement planning. Understanding how these holdings can function as vehicles for retirement plans, Brisibe says, is crucial for developing a lasting plan for HNW clients.  

While each client is unique, Brisibe says that a common thread among HNW clients is the expectation that they can facilitate the transition to the next generation. There is a gap between the rising generation and the business owner generation, he explains, and advisors need to work with the various generations in the family to facilitate a transition that satisfies all parties. They need to find ways to transition ownership of the business to a generation that might not be able to buy it outright. In doing so, they need to ensure that the parents’ or grandparents’ retirement will be kept intact. Tax efficiency and seamlessness, he says, should be key goals in this process.  

Even beyond the complexities of business ownership, Brisibe says there are plenty of other issues for advisors to tackle around HNW plans. Those include planning for family members with disabilities, using vehicles like Henson Trusts to safeguard those family members’ wellbeing. It can also involve strategic philanthropy and planned giving, creating tax efficiencies and helping these clients cement a philanthropic legacy.  

As they work with HNW clients, building the plan can be challenging enough. When it’s built, though, Brisibe says that an advisor’s work is far from over. He argues that these plans need to be updated and treated as “living, breathing documents,” in order to serve HNW clients well. He gives the example of succession planning and notes that even a succession plan needs continuity plans built within it in order to adjust for the circumstances that will inevitably arise to challenge the initial plan.  

Managing all this complexity requires education. As advisors look to capture these HNW clients, Brisibe suggests they look at their certifications. CFA and CFP credentials carry a great deal of weight, he says, and can help with the broad work an advisor does. There are more specific and technical certifications, too, which Brisibe believes can add value for these clients in particular. He highlights the Family Enterprise Advisor designation. That training, he says, gives advisors a better understanding of family governance, communication, and the facilitation of solutions that go beyond just succession plans.  

The FEA designation also helps advisors build their networks of supporting professionals. Brisibe notes that a multi-disciplinary approach to advising requires the support of dedicated tax and estate professionals. Some firms may have those professionals in house while others may require the advisor to make recommendations. In either case, he believes that building strong professional networks can be crucial to serving these complex clients well.  

“To serve these clients, build your acumen,” Brisibe says. “Advisors really know how to manage investments, but there are a whole host of things that the age we live in demands of advisors. In a nutshell, it requires building acumen and a professional network.”