Professor Dan Richards spoke to CFA Society Toronto members in October and November of 2018, and in January of this year, as part of his three-part, sold-out series, The New Rules to Attract Affluent Clients. Richards, who has an MBA from the Harvard Business School, is an instructor at the University of Toronto Rotman School of Management and is a recognized industry leader in delivering leading-edge ideas that engage advisors and help translate those ideas into action.

In this interactive workshop series, participants shared ideas and developed key takeaways from each session for results-oriented, actionable change in their practices. Participants were also given several useful tools, including a series of articles summarizing key ideas from the workshop, a Client Opportunity Template, and follow-up articles with additional information. The three-part series placed the onus on participants to take the necessary steps after each session, and to evaluate and share weeks later how the changes were beginning to deliver results to their organizations.

Identifying barriers

Participants began by exploring and sharing the barriers to change in their practices. Competing demands for time and resources are often at the top of that list. These barriers typically lead to inertia and falling back into old habits, despite recognition that current processes may be suboptimal. Richards encouraged participants to examine the barriers in their organizations, and to develop a plan for implementing change.

Delivering value

To attract and keep affluent clients in an increasingly competitive environment, advisors must focus on delivering value every day. When prospective clients ask, How will I be better off working with you?, advisors’ answers must draw upon an understanding of the mindset and needs of that specific audience, which may be different than those of other clientele. In his article “Getting in the HNW Mindset,” Richards outlines nine key traits shared by these HNW investors and provides strategies for ensuring your practice is aligned with their expectations. Among these traits are complexity, risk aversion, the desire for exclusivity, and the need for discretion. The focus must be on deepening relationships and adding value by meeting the unique needs of this particular clientele. Advisors must do the unexpected while building trust by demonstrating the utmost in ethics and integrity.

Talking to prospects

The successful outcome of a prospective client meeting depends on the advisor’s effective listening and communication skills. Sadly, this opportunity to distinguish oneself is too often squandered in overly long, excessively detailed presentations. Richards provided a number of tips for “getting past blah, blah, blah” when talking to prospects, including keeping the presentation short, asking questions, and focusing on the specific benefits important to that investor. To stand out in a sea of sameness, Richards stressed that advisors must convey the benefits of working together in tangible, concrete terms. In one case, a successful advisor walked a prospect through the client experience enjoyed by someone who had chosen to work with that advisor. Also critically important is ensuring prospective clients know the agenda in advance and are given the opportunity to customize it to their needs.

Specializing in a market niche

By sharing examples from Barron’s top advisors and Harvard’s leading business strategist, Michael Porter, Richards demonstrated how specialization in a market niche has translated into a winning strategy for advisors who serve the affluent market. By narrowing their client focus, advisors are better able to develop the deep expertise needed to become the “go-to” professional for investors with common needs. By sharing stories from other practitioners, Richards provided participants with a process for developing a targeted strategy within an advisor’s practice. Credibility is key, he said, so advisors must first invest the time in themselves to become the trusted expert for a chosen market segment, and then develop a profile and communications strategy to position themselves as the safe choice in that community.

Building your pipeline

Successful advisors will continuously build and maintain their pipeline with a strategy for building trust and staying in front of prospective clients. Richards explained that prospects take longer to decide today, requiring more patience from advisors. A successful communication strategy positions the advisor as a conduit to tailored, credible, informative resources targeting the prospect’s specific needs. The goal is to become the “fallback advisor” for prospects in the pipeline, some of whom will inevitably become clients.

Getting referrals

The credibility and profile that advisors build can lead to client referrals, the cornerstone of any successful, healthy practice. Richards presented the key reasons why clients hesitate to provide referrals and the steps advisors can take to reduce any unease the referring party might have. A key source of unease is ensuring the process is transparent for the referring client, so they know what’s going to happen next and are kept informed when it does. Referees should acknowledge the trust they placed in the advisor, both at the time of the referral and again in the future. New clients introduced through referral should be given special care to ensure they’re comfortable with the decision they’ve made. Advisors should seek permission from new clients to share their feedback with referees.

“Advisors must first invest the time in themselves to become the trusted expert for a chosen market segment, and then develop a profile and communications strategy to position themselves as the safe choice in that community.”

Segmenting your initiatives

Client satisfaction leads to retention and referral. To help make this happen, Richards outlined a relationship management segmentation strategy to identify and better serve advisors’ best clients. He provided a sample framework for evaluation in the supplementary materials, along with a number of strategies for deepening relationships and driving value with existing clients. Also included in these materials is Richards’ article “Five Ways to Get Families to Talk About Finances,” one of the most challenging areas of advisor practice.

For advisors to optimize their time with both prospects and clients, they must focus on delivering both quick and lasting value to the relationship every day. To do this effectively with HNW investors, advisors need to understand and tailor their knowledge while focusing and segmenting their initiatives. Successful advisors must also invest in a team to help meet the complex needs of affluent clients, and ensure sufficient resources are going to value-added activities.