If Multiple Advisors Are Now The Rule With UHNW Families, Don't Fight The Trend -- Co-Opt It

Thursday, March 24, 2011 22:17
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If Multiple Advisors Are Now The Rule With UHNW Families, Don't Fight The Trend -- Co-Opt It

Tags: high net worth | productivity | prospecting

During the recession, ultra-high-net-worth families shifted from working with at most two or three advisors to routinely dividing their assets among five or more. There are both challenges and opportunities here.

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According to Cerulli's upcoming Quantitative Update: Investors in the High-Net-Worth and Ultra-High-Net-Worth Marketplace -- coming out next week at a price tag of $10,000 -- a full 57% of wealthy families now split their assets among 5 or more advisors.

 

Back in 2008, it was a rare UHNW type who had more than 3 advisors, so this is a very recent trend, and probably related to the heightened sense of risk that even rich individuals now feel around the markets.

 

However, trying to spin this as an emerging mass market trend may be extremely premature. Mass affluent investors often struggle to make the minimum allocations that high-end wealth managers require, and splitting the pie into even thinner slices across advisors will probably only make things worse -- if nothing else, they'll lose out on breakpoints on fees.

 

As far as the truly rich go, the days of advisors dreaming of consolidating a bigger and bigger share of a truly rich client's wealth may be gone. While it's still possible to go from a secondary or tertiary allocation to the top of an UHNW client's list, it now looks unlikely that any advisor will ever get the entire pie.

 

But if all advisors are seeing their clients fragment their holdings across several competitors' books, this is an opportunity to reach out and, as the dot-com people say, "co-opterate" or co-opt a rival by aggressively cooperating.

 

Remember, team-based advice favors the key advisor who becomes the client's primary go-to contact, information source, and financial concierge. If there are multiple financial advisors on the "team" -- in addition to accountants, lawyers, trust officers, insurance agents, and so on -- then the one who locks down the center position gets to play quarterback.

 

Might be worth reaching out to your clients' other advisors. You can talk strategy, and your clients will be impressed to hear that you care about them so much that you're willing to step across the barricades.

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