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What It Takes To Attract And Serve HNW Entrepreneurs As A Financial Advisor

Among the many client niches financial advisors serve, successful business owners are often seen as an attractive group to work with, given the complexity of their financial situations (meaning that advisors have significant room to add value) and that many fall into the High Net Worth (HNW) category with as much as $5 million (and more) in assets, giving advisors a chance to move ‘upmarket’. Nonetheless, actually working with this group poses several challenges, from the ability to find these clients to crafting a unique and appealing service offering that addresses their unique needs.

In this ‘hybrid’ video-based article, Michael Kitces and John Bowen, CEO and founder of CEG Worldwide and CEG Insights (formerly Spectrem Group), dive into CEG’s extensive data on what HNW entrepreneurs are looking for in a financial advisor, how advisors serving this group can differentiate themselves, and what advisors can do to connect with prospective clients in this demographic.

As a starting point, while financial advisors tend to have a strong client retention rate (often well above 90%), data from CEG indicate that nearly 40% of business owners surveyed said they were at least somewhat likely to switch their primary financial advisor in the next 2 years. As while many entrepreneurs are perpetually on the lookout for the ‘next big thing’ when it comes to business opportunities, they are also receptive to the idea of switching financial advisors who might offer a more compelling value propositions.

Which presents an opportunity for advisors with a differentiated service offering to win new clients (while also serving as a warning for advisors with business-owner clients who might be on the lookout for ‘better’ alternatives!). Notably, when it comes to attracting clients, client referrals tend to be the largest source of prospective client leads for those already serving this group, according to CEG data. For advisors getting started with prospecting HNW entrepreneurs (and whose clients might not know many business owners!) professional networking organizations focusing on entrepreneurs and executives can be a good source of potential leads.

In addition to seeking out professional networking solutions, Bowen suggests that advisory firms can also attract HNW business owners by ‘repackaging’ the firm as a “virtual family office” that curates a vetted list of professionals (e.g., accountants and attorneys) to recommend to these clients. Working together, these professionals can conduct a “stress test” of the client’s current situation to proactively identify potential areas of weakness in the client’s financial, tax, and estate planning. For instance, many business owners have loosely defined succession plans (or none at all!), so offering guidance on create a purposeful succession plan can be a high-value service for this group.

Ultimately, the key point is that while their wealth can make HNW entrepreneurs an attractive client niche, their predilection for looking for new opportunities can make them a challenging group to retain. Nonetheless, by identifying an effective prospecting strategy and creating a value proposition offering a curated, unified collection of services (e.g., financial planning, tax, and legal) that helps them prepare for the “next big thing”, advisors can not only potentially win new clients in this group, but also continue to work with them as their businesses (and wealth) grow!

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