Strategies for HNW clients

The demand for strategic wealth management in Canada is on the rise. Affluent Canadians are looking for advisors who can understand their complex financial and non-financial needs, beyond investment and financial planning. As clients’ priorities evolve through different life stages, having a long-term relationship with a strategic wealth management partner is becoming increasingly important to them. To support these affluent individuals through their life and career transitions, an advisor should be equipped with the knowledge, skills and educational credentials to offer relevant solutions for a full scope of financial needs, from wealth accumulation to wealth preservation, conversation and transfer.

Shifting gears from tactical advice to strategic wealth management

There is a phase in a client’s life when financial needs become more complex. For many, this period comes between the ages of 40 and 60, when wealth has already been accumulated, and there is a growing need to protect and effectively convert it so it provides retirement income and, eventually, a legacy. At this juncture, tactical investment or traditional financial planning advice may no longer be enough.

Affluent clients look for advisors who provide a full range of financial strategies relevant at different life stages – coupled with a broad, strategic perspective on wealth management. Wealthy Canadians expect their advisors to understand and support their complex financial and lifestyle priorities, beyond specific financial products and narrowly defined solutions, such as mutual funds or insurance.

Often, the most effective arrangement for them is having an ongoing relationship with a single, highly informed professional bringing together different areas of financial expertise. For example, if a client is interested in trusts or estate planning, then accounting and legal wealth services related to these needs may be of value to her as well. Strategic wealth management provides an integrated, interdisciplinary wealth management destination. It combines all products, services and relationship and practice management approaches essential to creating, sustaining and transferring wealth, beyond a single advisor’s area of expertise.

Why strategic wealth management?

The nature of wealth ownership in Canada is changing. In the country where over 25% of adults work for themselves, many emerging affluent and ultra-wealthy high-net-worth individuals are entrepreneurs with equity in their own businesses. Some wealthy Canadians are ambitious dual-income professionals mid-way through their careers. As these people age and have families, their lifestyle, professional and financial needs change as well. Business owners may shift their priorities from business building to succession and retirement planning. As their families grow, they may become interested in trusts.

As wealthy Canadians move through different career and life stages, from accumulating wealth to managing its security and transfer, many start looking for integrated wealth management solutions beyond standard funds and securities. Early client-advisor relationships established at the beginning of their wealth journey may be at risk at the peak of the client’s net worth if the advisor does not have the skills and tools to offer comprehensive wealth strategies or leverage partnerships to introduce relevant outside expertise.

CE Courses – Earn valuable credits – Take our courses

It goes without saying that clients expect their advisors to know more about wealth management than they do. Yet, understanding the needs of the increasingly more educated and savvy affluent Canadians requires a level of experience and sophistication not only beyond specific investment solutions but often outside some advisors’ strengths and expertise. Strategic wealth managers bridge from a dominant focus on investments to an integrated view of all their clients’ assets, rather than just those under their direct management. In doing so, these wealth professionals anticipate and respond to their clients’ financial needs and lifestyle expectations.

Opportunity for advisors

Advice professionals looking to sustain and expand their affluent and high-net-worth client base should be aware of the opportunities created by today’s changing wealth ownership landscape:

• Affluent Canadians have a higher education, are more demanding and sophisticated and have a better understanding of the process of wealth creation, maximization and protection. They also demonstrate a greater awareness of investment choices, such as owning stocks and retirement plans.
• Canadians are living longer and healthier, with retirement often spanning 20 to 30 years, and some affluent clients are preparing for a retirement that may turn out to be almost as long as their careers.
• Many affluent Canadians carry a heavy debt load to finance their lifestyles, in the expectation that their rising income and asset appreciation will translate into impressive net worth as they move through their 50s and 60s.
• Often, clients work with a number of financial professionals supporting them in different areas of wealth management; however, clients increasingly find it appropriate and convenient to build a relationship with one strategic wealth advisor who can connect them with different areas of financial expertise.
• Clients are also looking for advisors who understand their non-financial needs and priorities and know how to translate them into effective wealth management strategies.

Riding the trends

Strategic wealth management for high-net-worth Canadians has a significant business growth potential for advisors, with many under-serviced niches. Here are a few tips on how advisors can differentiate themselves in this market:

A strategic wealth management practice

• Broaden the scope and sophistication of your strategic wealth management practice by including a full scope of wealth management solutions.
• Offer a single point of contact for clients, building partnerships with other wealth specialists; work as a team with them to deliver all aspects of wealth management expertise.
• Operate an ethical practice, with full knowledge of your client and gatekeeper responsibilities.
• Adopt a professional, holistic and consultative approach to the management of client’s assets, focusing on long-term relationships rather than specific tactical solutions.
• Focus on fewer clients with more complex needs to provide a higher level of personal contact. Treat these relationships with care and respect. Look at the big picture of client needs, from setting their investment objectives to balancing risk, returns and liquidity to managing assets to strengthening the asset base by including alternatives to traditional products.
• Understand the nuances of business ownership and be prepared to serve entrepreneurs as successful businesses emerge.
• Entrepreneurs are wealth drivers in Canada and dominate the high-net worth category.
• Close to half of Canadian households in the high-net worth category own businesses.
• Learn to identify entrepreneurial successes earlier to grow the client base and a full-service strategic wealth management practice.

  Professional knowledge and advice

  • Develop a deeper knowledge of different client risk profiles, various asset classes, tax-efficient protection, conservation and succession strategies.
  • Focus on creating long-term relationships with clients, helping them meet their life goals in a holistic manner, delivering on all aspects of personal financial management.
  • Be sensitive to non-financial priorities of affluent Canadians and their families, such as investing for children’s post-secondary education, taking care of aging parents, finding time and money for vacations, surviving losses of family members, sickness or the termination of employment.
  • Be sensitive to clients’ life stages and transitions, which may trigger the re-assessment of the client-advisor relationship. Remember that each of these life stages and transitions is also an opportunity to earn client confidence and loyalty and establish relationships for life.
  • Demonstrate credentials in strategic wealth management by earning and maintaining quality financial designations that address all aspects of integrated wealth management, including convenience, close client-advisor relationships and a full product and service offer. For example, the Chartered Strategic Wealth Professional (CSWP) designation is designed specifically to serve the increasing number of high-net-worth clients with complex financial needs.

  Wealth management is a dynamic industry with significant opportunities for advisors. Advice professionals that have the knowledge, sophistication and credentials in lifecycle wealth management will not only sustain their business with affluent and high-net-worth clients, but will also grow it dramatically.

Dr. Roberta Wilton is President and CEO of CSI, Canada’s leading provider of financial services education. Prior to joining CSI, she operated her own company specializing in capital markets education and investor relations.