Wealth management firms typically emphasize applying a personal touch in how they serve clients, driven by a sincere concern for their well-being, and a desire to build long-term relationships.
And to a significant extent, the industry has delivered solutions that work for both clients in the mass market, generally defined as individuals and households with below $1 million in net worth, and to the upper echelons of the high net worth, broadly defined as those who have more than $20 million in net worth. The former is usually supported by a spectrum of small, independent financial advisor businesses, while the latter continues to be dominated by an assortment of white shoe family offices and Wall Street institutions.
But this also means there is an “overlooked millionaire” segment of the wealth management market, comprised of individuals and families with between $2 million to $20 million in net worth, who have more complex needs than the mass market, but simply aren’t worth the time and attention of the top players in the industry.
These overlooked millionaires—frequently self-made, highly driven individuals who would like to explore how they can best use their wealth to reflect and promote their values—are generally in need of professional guidance that focuses on what they can accomplish with their wealth, versus just returns on investment.
There is a significant opportunity for wealth managers who can help clients in this underserved segment of the population feel safe enough to reveal their secret aspirations, and from there, craft a financial plan for each client that aligns their lifestyle, dreams and legacy with their wealth goals.
Dreams
Few high-net-worth individuals view general goals like “saving for retirement” or “travel” as a deeply held dream. Dreams are more specific, and therefore may feel more out of reach unless a financial advisor shows clients differently.
Advisors can begin that process by emboldening clients to define their dreams. This may entail a client saying he dreams of retiring at age 68 and continue to live in his current home, or that she dreams of taking the entire family on a cruise to Alaska.
From there an advisor can determine whether the client’s dreams match up with the client’s career goals, as well as whether those dreams complement the dreams and career goals of the client’s partner.
It’s not too much of a stretch for the advisor to inquire about the dreams and career goals of anyone else whose life might directly affect the client. To the extent possible, this information assists in either turning the client’s dreams into reality or leading the client to modify their dreams to fit reality.
Legacy
Exploring how a client views his or her life legacy is not a matter of reviewing which assets the client will leave behind when he or she dies, as much as it is a matter of how the client wishes to share his or her values and extend his or her influence while alive.
A client may consider it paramount to share values with children or grandchildren, a religious community or charity, or even a city. Many clients value some combination of these intended beneficiaries.
Advisors need to understand the values a client intends to sustain or foster, learn about the audience or recipient, and the manner in which these values are to be transmitted, before structuring financial vehicles to transfer the client’s assets.
Lifestyle
The heart of a well-aligned financial plan calls for the advisor to take stock of a client’s lifestyle. How does the client like to live? How does the client save and spend? What gives the client gratification? Advisors must know these items if they expect to tell the client what’s necessary to achieve his or her goals. That, in turn, is the prerequisite for the advisor and client both discovering whether the client is ready to do what’s necessary to achieve his or her goals.
This doesn’t always have to mean cutting back on joys like dining out with the family or spending less time on vacation. Clients are often surprised to learn this could mean cutting back at the office so they can perform more volunteer work with cherished philanthropies, or purchasing a lake house where they can host large family gatherings. Other steps, including but not limited to innovative investing, also may be necessary for clients to achieve their goals while maintaining their lifestyle.
Wealth
Once the advisor has gotten the client to address dreams, legacy and lifestyle, it is time to assess the client’s wealth. Advisors and clients must work together to look through many records, some the client probably never thought to incorporate into net worth calculations. In addition to bank accounts, credit cards, brokerage accounts, retirement plans, pay stubs and mortgage statements, it’s worth digging into medical records since family health-care costs can greatly affect one’s wealth over the long term.
The advisor has several duties at this stage: to make sure the client’s wealth is accurately identified, organized and working for the client; and to position the client to make quick and easy adjustments when life’s uncertainties emerge.
Clear Vision
By the end of this process, advisors have relieved clients of stress from “What if” questions by ensuring they have confronted their fears over all the imagined possibilities. Depending on the client, these scenarios may involve financial decisions that affect not only the individual but their loved ones and business partners.
Advisors can then incorporate contingency plans and safeguards into client portfolios that evaluate risks so clients make informed decisions. Once clients have a clearer vision of which strategies will work best for them, they become much more motivated to stick to the financial plan advisors have created for them.
Greg Powell is president and CEO of Fi Plan Partners, a wealth management and financial planning firm based in Birmingham, Ala.
