3 surprising secrets about high-net-worth clients

Everything is not what it seems to be from the outside when working with high-net-worth clients. And it’s what you don’t expect about that demographic that may keep you from working with wealthy clients.

As an advisor, you know that high-net-worth clients:

• Are short on time because of their demanding work schedules
• Associate with other high-net-worth people, making them a great source of referrals
• Have money to pass on to family and are interested in legacy planning and transferring wealth

There’s much more to working with high-net-worth clients than this, however. Learn the secrets of working with the wealthy and you can be of better service and value to them. Some of these secrets about the wealthy include

1. Appearing average
“My clients don’t view themselves as wealthy, including one client who is the top 1% income bracket,” said 32-year MDRT member Brent R. Kimball, CFP, ChFC, of Pembroke, New Hampshire. Often, the most private millionaires can live in average houses in average neighborhoods. They tend to be self-made successes who came from humble beginnings. 

“The high-net-worth can be very private,” agreed 16-year MDRT member Matthew Charles Collins. “The wealthiest guy I deal with drives a Camry, and not even his kids know what he’s worth. He doesn’t want his kids growing up acting entitled.” 

2. Experiencing cash flow problems
For other people with wealth, they can tie up their money in business or assets that aren’t easy to convert to cash. And, like anyone, the wealthy can live beyond their means. The lack of cash flow, said 12-year MDRT member David Travis Wyatt II, of Greenville, South Carolina, “can cause lots of stresses and strains.”

In some areas where even modest housing is expensive, clients have much of their wealth tied up in their homes. “Sydney is expensive. The average house price is well in excess of $1 million. But a client might not be high-net-worth because it’s not like you can sell off a bedroom if you need cash,” said Collins, of Mona Vale, New South Wales, Australia.

“They can have the assets but not a lot of cash flow. That’s the problem we solve for them,” said eight-year MDRT member Renyu Xu, of LaSalle, Quebec, Canada, who focuses on clients who have more than $10 million in assets.

3. Lacking education about money
One reason for the cash flow problems is that just because the high-net-worth make or have inherited a lot of money, it doesn’t mean they understand about investments, protecting wealth, taxes or cash flow for businesses. Your clients may be specialists in their field, but that field likely isn’t financial advising or insurance.

For example, seven-year MDRT member Chris George, CFP, TEP, of Vancouver, British Columbia, Canada, found one client who missed $90,000 a year in tax breaks. 

It would be a mistake to think you can skip educating wealthy clients. “We need to spend more time educating them,” Xu said. 

When talking with them, like anyone, don’t use jargon. It confuses everyone. “Talk with them about something you have in common and talk to them in simple language,” Collins said. Take some time to know and understand what’s important to them, he said.

Understanding this about the high-net-worth can help advisors work better with them and attract more clients like them.

For more about working with high-net-worth clients

• Watch “Connect with high-net-worth prospects”
• Watch “Catching the big fish” (MDRT members only. You can also read or listen to this MDRT meeting presentation.)