Steve Kolano is managing director of investments for Integrated Partners, a leading financial advisory firm with ultra-wealthy individuals. He helps Integrated’s network of 170 independent advisors nationally work with affluent individuals.
Russ Alan Prince: Wealthy families are getting hounded constantly by experts and advisors. What can you do to stand out?
Steve Kolano: You need to dare to be different. With so many experts and advisors trying to infiltrate, the ones that separate themselves are the ones that truly listen and are not too eager to get a “piece of the pie” but instead focus on understanding the bigger picture for an ultra-wealthy individual or family. The secret? Understand that wealth makes life more complex, and wealthy individuals require more time, care and attention.
Prince: That makes sense. But how?
Kolano: It all begins by paying close attention to the intangibles and dynamics and appreciating that it takes time to earn trust to provide true advice. You need to learn to ask questions, actively listen and appreciate playing the “long game” by building a relationship over long periods that tend to be stickier by building a foundation of trust. Set yourself apart by not being too eager but instead being curious and empathetic to the unique aspects of the family situation.
Prince: Okay. So, it all begins with listening. But what can you do differently from there?
Kolano: Often, wealth is already there. But what is rare and valued for ultra-wealthy clients is trusted partners. And I’m not saying “trusted partners” like some jargon in an ad. I mean a true partner. Building that trust and being perceived as a trusted partner may require a period of time that no direct compensation is received. Still, a foundation is being developed through sound advice that is tailored to what is truly unique about the client’s situation. The focus shouldn’t be on the wealth and how to help manage it, but instead, a differentiated approach is understanding how you can help to be a steward of the wealth on behalf of the client.
Prince: What do you say to advisors who say the long game is difficult?
Kolano: Well, you have to accept that your role, often, needs to evolve from simply an advisor towards a “gatekeeper” of their capital where you have their best interests at heart. Ironically, to be different, an advisor must not care about the wealth but instead care first and foremost about the people and objectives the wealth serves.
Prince: How do you get wealthy investors to lean in?
Kolano: They have to trust you and know that you care about their situation and have heard and empathized with the unique issues they are grappling with. That level of trust is developed over long periods of time. Often, this is done when you are not meeting with the client but instead demonstrate that their needs are on your mind when you are not meeting with them.
As an example, forwarding an article you see related to something they mentioned in a meeting. Another example is remembering the minute details of what was discussed in past meetings and helping to shape a mosaic over time. Little things that demonstrate they were being “heard” add up to a big impact over longer periods of time and are the building blocks for a strong foundation of trust that ultra-wealthy clients and families highly value. Demonstrating that you are not focused on the wealth itself but instead on how the wealth impacts the longevity and legacy of the family is key in getting clients to consider you a truly trusted advisor.
Prince: What are some of the things sitting on the complexity curve?
Kolano: Often, an advisor deals with a family, and family dynamics, as opposed to a couple or an individual. Often, multiple generations and objectives are impacted by the total wealth pool, given that the wealth pool exists beyond the lifespan of a single wealth owner and his or her direct heirs. Understanding the source of wealth is important in understanding the complexity curve for each family, given that there may be an emotional attachment to a business as a source of wealth.
Appreciating that somebody who spent their whole life building a business and just sold it is going through a myriad of emotions and options as they ponder “what’s next?” is a part of the complex equation in helping to manage wealth towards the future. With more and more taxable assets, tax mitigation in order to maximize cash flow for future endeavors becomes critical. Charitable activities and philanthropy potentially play a key role in the wealth profile.
Potentially difficult conversations also become part of the complexity curve, whether it be spending habits or activities not aligned with the stated wishes and goals of the family. Sophisticated estate planning strategies become available through trust structures and vehicles like private placement life insurance strategies. There is an increased focus on helping to manage the balance sheet, assets, and liabilities more closely than just focusing on the assets. Thoughtful and efficient ways to use capital and leverage also become part of the equation for the ultra-wealthy.
Lastly, alternative assets and illiquid investments also become a bigger part of the complexity curve profile, given the near-term liquidity needs of the family may allow for more capital to be invested in private markets and illiquid investments.
Prince: With markets always in flux, how do you keep wealthy clients focused on this bigger picture?
Kolano: By understanding the near-term liquidity needs of the client or family allows an advisor to demonstrate that the overall wealth pool more than supports near-term and even multi-year needs. As such, with the near-term needs met, it naturally opens up the conversation to longer-term goals and bigger-picture conversations.
Russ Alan Prince is the executive director of Private Wealth magazine and chief content officer for High-Net-Worth Genius. He consults with family offices, the wealthy, fast-tracking entrepreneurs and select professionals.
