covid-19 means referrals are your best way in.
by anthony glomski and russ alan prince
your $5-million high-net-worth practice
client-focused business development is fundamental. the everyone wins process is effective at every level of wealth. as we said, the everyone wins process is not only business-enhancing, it’s life-enhancing. so, if you are interested in working with the super-rich and with single-family offices, mastering the everyone wins process will serve you well.
more: the power of stress testing | product-neutral or product-inclusive? | help your referral sources become thought leaders | what the wealthy want | the essential process for building a high-net-worth practice | 4 components of a high-net-worth practice | the coming boom in tax services for the super-rich
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on the other hand, you will need to make modifications to how you operate, including what you can deliver to these cohorts when it comes to your high-net-worth practice. an obvious example is that a single-family office will turn to you for all that most high-net-worth practices can deliver. this is extremely rare.
what is more often the case is that you are one of several professionals they are using. very likely, they engage you for accounting-related or specialized services such as cyber consulting or business coaching.
there are numerous highly profitable possibilities if you choose to work with the super-rich and their single-family offices. before talking about them, we will address a widespread characteristic – their preference for obscurity.
intentionally obscure
there are some of the super-rich who crave the limelight. they want recognition for many possible reasons, from ego to being able to use their stature to enhance their business interests. meanwhile, a much larger percentage of the super-rich prefer some level of anonymity.
today, being extremely wealthy can have significant drawbacks. there is always the fear of being targeted because of their wealth. scarily there are criminals for whom kidnapping and ransom is a business model. increasingly, there is festering concern among a percentage of the super-rich that inequality might incite the masses to make them the enemy.
some super-rich families have even been known to resort to using body doubles to help them address complicated personal and professional situations. through the art of misdirection, this and similar approaches are proving very useful for security purposes.
being obscure can also work to the benefit of the super-rich in their business dealings. for example, one approach is to engage in “false flag” operations. they create and use various corporate structures that provide legal and perceptual barriers between themselves, their single-family offices and the people with whom they are negotiating. this approach enables them to obtain better terms than otherwise.
a powerful strategy used more and more to approach companies they want to buy surreptitiously is for the super-rich to use retained intermediaries. these “cutouts” are also proving very useful in sourcing diverse providers and investment opportunities.
more specifically, a retained intermediary is an individual who is employed by the super-rich or their single-family office to identify and qualify providers and investment opportunities. professionals such as investment advisors, accountants and attorneys would deal with the retained intermediary. only if they pass muster would they be engaged and introduced to the super-rich family or single-family office senior executives.
the best way to source the super-rich and single-family offices: if you want to work with the super-rich and single-family offices, waiting around for a retained intermediary to knock on your door is not a good strategy. the most effective way to connect with them is the same way to connect with the wealthy – being referred by the professionals they are working with and trust.
it is more likely for single-family office senior executive clients to refer you to other single-family office senior executives than for super-rich clients to refer you to their financial peers. client referrals do occasionally happen at these levels of wealth, but it is not very common.
using the everyone wins process with other professionals who have these types of clients can sometimes result in an introduction to you for specific services and capabilities. they are not looking to revamp their entire network of professionals they are presently using. the one exception is when the next generation takes over. then, it is the norm for just about all the advisors to be replaced. the “new” family members in charge tend to prefer their advisors to those of their parents.
opportunities for your high-net-worth practice
let us look at the possibilities of what your high-net-worth practice can deliver to the super-rich without a single-family office and to single-family offices. we are not going to talk about the expertise you and your firm can conceivably deliver to the companies the super-rich own.
in exhibit 1, we have listed some of the expertise and possibilities with both the super-rich without a single-family office and single-family offices. keep in mind that these are erudite generalizations, and each super-rich single-family office must be evaluated individually.
exhibit 1: opportunities
| services and products | super-rich | single-family offices |
| administrative services | high: while some basic functions may be done in house, most of these services are outsourced | moderate: a percentage of these services are handled internally with essential functions done externally |
| wealth planning | high: regularly use external experts | high: while relying on some internal specialists for more complex planning, likely to use outside experts |
| investment management | high: often rely on outside specialists, but are unlikely to consolidate all their assets with any one provider | high: manage the asset allocation and related functions internally and select money managers |
| lifestyle services | high: regularly outsourced | high: regularly outsourced with extensive oversight |
| special projects | high: regularly outsourced | high: regularly outsourced with extensive oversight |
| trust and company services | high: regularly outsourced | high: may have their own trust company or will outsource with extensive oversight |
| stress testing | high: regularly outsourced | high: regularly outsourced |
| property and casualty insurance | high: regularly outsourced | high: regularly outsourced with extensive oversight |
| life insurance | high: regularly outsourced | high: regularly outsourced with extensive oversight |
| personal and business coaching | moderate: regularly outsourced | moderate to low: regularly outsourced with extensive oversight |
| consulting | low: regularly outsourced | moderate to high: regularly outsourced with extensive oversight |
| philanthropic advisory | moderate: regularly outsourced | moderate: if desired, will either have an expert on staff or will outsource |
there are undoubtedly other services and products to consider. the point, however, is that the extremely wealthy have extensive needs and wants. your ability to address their preferences can be quite profitable.
conclusion
working for the super-rich and single-family offices is likely very different than bringing wealthy clients to your high-net-worth practice. these types of clients can be very profitable and enable you to build a $5 million high-net-worth practice. moreover, it is quite possible to achieve with clients from the wealthy to the super-rich.
the biggest issue with working with the super-rich and single-family offices is favorably connecting with them. the best answer is to establish and enhance business relationships with other professionals who currently have these clients. there are other ways to connect with them, but because of the covid-19 crisis, getting referred by the professionals they are currently engaging is the hands-down best approach.