Going HNW requires full-time commitment, expert says

(August 30, 2004) Advisors interested in changing to an exclusive focus on high net worth clients can’t go the part-time route, says Toronto-based advisor Kurt Rosentreter. Affluent clients will see through it, the Berkshire advisor said at a recent wealth management conference in Toronto.

“HNW is a specialty and if you take it seriously and put the practice together, hunting out clients that are still in back-loaded mutual funds with an advisor in a strip mall are your low-hanging fruit,” said Rosentreter at the Strategy Institute-sponsored event last week.

During the transition to HNW, Rosentreter says existing clients will stay, but many will eventually have to be culled as the process moves forward. “It’s hard to break apart relationships, but it is possible,” he insists.

Although not all advisors are suited to the HNW market, Rosentreter had a few suggestions for those who feel ready to make the leap. “It helps to have personal credentials,” said the advisor, who holds CA and CFP designations and belongs to a couple of specialty associations, such as the Society of Tax and Estate Practitioners (STEP) and the Investment Management Consulting Association (IMCA).

“In my opinion, [IMCA] is the only HNW investment counselling designation in North America and can help position you as an elite advisor,” he said.

Corporate branding is also important, he said, since all dealers are not committed to HNW. “Having an office in a strip mall won’t work, look and feel is very important.”

Rosentreter also suggests using professional-looking documentation at all times, including flow charts outlining the investment process, and writing media articles, starting with your local newspaper.

Other HNW advisors have noted that product is not as important as meeting client needs for the affluent advisor. Rosentreter agrees, but adds that from a competitive point of view, it’s critical for advisors to offer more than just mutual funds. “If [a competing] advisor is only mutual fund licensed, I will pick on that,” he says.

“You need far more than mutual funds,” he stressed, pointing to F-class funds and separately managed accounts as alternative examples. “For the educated HNW person, this is a fresh approach.”

On a final note on the topic, Rosentreter said that although HNW clients want customized financial plans, for the majority, a couple of pages will suffice. “You won’t make money doing a 30-page plan for 300 clients,” he said, his suggested maximum number of clients in a successful HNW practice.

“Too many advisors rely on financial planning software,” he said. “When you rely on a computer program to create the value you have, you’re in trouble. I’ve come full circle — I do more on the back of a napkin and with a calculator.”

Filed by Doug Watt, Advisor.ca, doug.watt@advisor.rogers.com