Stepping up to the HNW plate

“The ultimate goal is to become the trusted advisor and complete the plan for those clients,” he notes. “Then you’re at the table to participate in a huge opportunity. The other advisor would only be helping them with one specific [item] such as getting access to a new issue or IPO.”

Capgemini’s latest survey on the high-net-worth in Canada projects that by 2010, there will be upwards of one million-plus households with $1 million in investable assets. In addition, 80% of the wealth in Canada is concentrated among individuals 55-plus years of age, looking primarily for estate planning and wealth-transfer services.

“As [the boomers are] driving on their Harley Davidsons, those clients are starting to feel their own mortality. Intergenerational wealth transfer is becoming an issue,” says McLean. “Seventy-one per cent of that wealth is first-generation wealth, which is great news. The vast majority of clients have never experienced this before; they’re not equipped to deal with it, therefore they’ll seek the expertise somewhere.”

But missed opportunity and lagging assets are the downfall for those advisors who sit on the fence, serve up transaction-only initiatives or pride themselves on being market-timing stock-pickers. Those who don’t offer the comprehensive suite of services are basically leaving themselves open for competing advisors and ultimate client defection, says McLean.

Advisors who have already snagged that second-generation book should not rest on their laurels. That mere fact alone is not enough to guarantee those assets stay with you, he cautions, as people are wont to “re-visit advice,” particularly at times of a large money movement event.

“It doesn’t mean that they leave, but three out of four times they may re-visit where they get advice,” he explains. “So the better the experience around wealth transfer, the better coordinated and understood, the higher the likelihood that those assets will stay with you. And the clients will get comfort that their affairs and wealth transfer was well handled.”

The next best thing, he adds, is to then sit back and watch the new clients that surface as a result of that exemplary service.

McLean says for those advisors who are client-centred and proactive, as opposed to reactive and investment focused, the pay-off is huge — upwards of 30 times more asset-gleaning potential than that of the latter group. The goal, he says, is for advisors to steer clear of allowing their business to control them and instead of competing on price and product, to focus on business process and solutions.

“The clients want advice. When the advisor controls the business he has a much higher level of independence,” says McLean, “Unfortunately, being reactive on the client and just presenting product ideas for the portfolio brings a low level of loyalty and commitment from your client. True high-net-worth investors aren’t afraid to pay for expertise and pay for advice. Many of them do it in their own business dealings, they are used to seeking expertise and paying for it and price is no issue.”

Filed by Heidi Staseson, Advisor.ca, heidi.taseson@advisor.rogers.com