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Many registered investment advisors actively seek business from prospects in the ultra-high-net-worth and high-net-worth spectrums and that’s understandable. In addition to often being somewhat sophisticated about investing, these clients bring more assets to the table and that’s good for a practice’s top and bottom lines.
Good news to be sure, but exceeding these clients’ expectations is a different ballgame than simply winning the business. In any environment, the opposite is true. Affluent clients want advisors to be diligent and that’s particularly true in the current climate.
Well-heeled clients have unique sets of demands. That’s further confirmation these clients need their advisors and that advisors need to have asset-level inflation-fighting ideas and strategies. Among those demands are comprehensive risk mitigation strategies. Yes, that’s something that’s pertinent to a broad swath of clients, but it’s of particular importance to affluent clients.
Fortunately, some of the risk-reduction solutions for rich clients aren’t complex. Some are rather simple as is detailed below.
Investigating Insurance
Insurance isn’t a glamorous financial topic. Far from it, but it is one of those things that nearly clients bemoan until they need it. It’s also relevant to the high-net-worth crowd.
“Insurance can be a useful risk-mitigation tool, not just for homes and vehicles, but also for art and collectibles, household staff, and even certain activities, such as board membership,” notes Morgan Stanley Wealth Management. “For affluent families, it’s important to identify the risks they commonly face and how they can remedy any coverage gaps.”
Chances are many clients, regardless of income range, already have auto, health, home and life insurance or at least a couple of those options. However, there are coverage areas basic policies don’t cover, including art and automobile collections, cybersecurity and more.
“For high net-worth families, there may be a need for more than just credit monitoring and identity-theft support to protect against growing online threats,” adds Morgan Stanley. “Publicly available information about such families can make them more vulnerable to targeted attacks, aimed at gaining access to personal and financial information. Cybersecurity services, including a dedicated response team, can help minimize the impact of online threats or fraud.”
How Advisors Can Help
Holistic practices and those with experts on staff or those willing to engage experts are well-positioned to meet the evolving needs of affluent clients. That doesn’t mean advisors need to be masters of all subject matters, but they should, at the very least, have resources in place to elevate service to wealthier clients.
That can include services such as investment property insurance and security when traveling. Just two examples, but they highlight the often delicate, unique needs of high-net-worth clients.
“Specialized property and casualty risk advisors can help families sort through their various policies and seek to bundle them to reduce costs and negotiate preferred terms, such as group pricing for cybersecurity services and data recovery costs,” concludes Morgan Stanley. “Bundling policies may also be a good way to coordinate renewal dates and premium payments, as well as to streamline claims processing.”
Related: Advisors Should Discourage Clients from 401(k) Loans