Strategies for attracting and retaining High-Net-Worth Individual (HNWI) clients

04/22/2024 — Key takeaways:

• A High-Net-Worth Individual (HNWI) is defined as a person having liquid financial assets of over $1 million, excluding assets like primary residences and consumables.
• For financial professionals looking to grow their portfolio of HNWI, understanding the unique needs and expectations of this demographic is critical.

Attracting and retaining high-net-worth individuals (HNWI) as clients can be a significantly more nuanced process compared to working with other client segments. For financial professionals looking to grow their portfolio of HNWI, understanding the unique needs and expectations of this demographic is critical. According to a study by Chubb and The Wharton School of the University of Pennsylvania on ultra-high-net-worth individuals, or UHNWI, 95% of respondents with $50M+ in wealth, and 80% of individuals with $30M+in wealth would prioritize coverage and service over price. They also found that most UHNWI in the study viewed their wealth holistically, meaning that they think of multiple factors to paint a more complete picture of their family’s total wealth rather than individual assets.¹ Knowing this, here are strategies to consider when working with this group:

What is a High-Net-Worth Individual?

Defining High Net Worth: Across the financial industry, a HNWI is defined as a person having liquid financial assets of over $1 million, excluding assets like primary residences and consumables. Net worth is calculated as total liabilities subtracted from total assets.

Expectations of Financial Professionals: HNWI clients generally look to work with financial professionals who can provide comprehensive management of their entire financial picture, as evidenced in the study shared above. This can include what you’d typically expect like investment management, estate planning, tax planning, but also tangible non-financial assets, operating businesses assets, human capital and liquid financial assets.²

Attraction strategies

Build a reputation of trust and expertise

HNWI clients, like many clients, typically value trust above all. Cultivating a reputation as a trustworthy and knowledgeable expert in the finance industry can help you stand out. Make sure your credentials are visible and consider contributing thought leadership content to well-respected financial publications, social media sites, or speaking at industry conferences.

Offer personalized and holistic services

Tailoring your services to each client’s unique financial situation can make you a top choice for those needing financial guidance. A holistic approach means integrating various aspects of their financial life into a coherent plan that aligns with their long-term goals—and this of course can apply to all kinds of clients.

Leverage referrals and networking

Word of mouth is powerful among HNWI individuals. Cultivating strong relationships with existing clients who can provide referrals is a great way to build your clientele. Also, networking in communities or groups where HNWI individuals spend their time, whether that’s charity events, exclusive clubs, or professional associations can also be beneficial.

Utilize technology and data analytics

It can be helpful to attract clients by utilizing cutting-edge financial software and tools to offer sophisticated solutions and insights. Having the right technology at your disposal can be the difference between providing mediocre services and delivering exceptional value to your HNWI clients, who often appreciate innovation, especially when it can lead to better financial outcomes.

Retention strategies

Maintain frequent and meaningful communication

Keeping in touch with HNWI clients through regular updates and additional check-ins during major market movements or life events can help establish you as a trusted partner in their financial journey. Communication should be personalized; understand their preferred method, whether it’s face-to-face, phone, or email.

Educate and advise beyond investing

Offering ongoing education opportunities that can empower them to make informed decisions about their wealth could also be a strategy to retain your HNWI clients. This can include seminars, newsletters, or personalized reports that cover a breadth of topics from philanthropy to market trends.

Ensure privacy and discretion

HNWI clients may have heightened concerns about privacy and security due to the amount of wealth they possess. Ensuring that you have robust systems in place to protect their information and respect their need for discretion is essential when helping manage large assets.

Demonstrate performance and value

HNWI clients will most likely be expecting to see that you’re adding value. This isn’t just portfolio performance but also the time and headaches saved by having an expert carefully manage complex aspects of their financial life.

Be responsive and proactive

As with all clients, quick responses to their concerns show that you prioritize their needs. Additionally, being proactive about reaching out with new opportunities or risks that you perceive within their portfolio or financial plan can help build trust.

Special considerations

Customized investment opportunities

HNWI clients might have access to and be interested in more sophisticated investment vehicles. Be prepared to offer customized investment opportunities such as private equity or hedge funds.

Tax implications and estate planning

Understanding the intricacies of tax and estate planning and being able to minimize liabilities within the bounds of the law is crucial. Be ready to collaborate with or recommend tax professionals and estate planners to assist your HNWI clients.

Ethical and sustainable investing

Many HNWI clients are interested in ethical and sustainable investing. First coined in 2005, Environmental, Social, and Governance, or ESG, investing is a socially responsible investment management approach that takes into account companies’ impact on their communities and the planet at large—and nearly a quarter of all U.S. professional investments today fall into this category.³ Familiarizing yourself with ESG criteria and how it can be incorporated into investment strategies can be extremely beneficial for HNWI client retention.

Conclusion

By nurturing a profound understanding of the HNWI mentality and offering tailored, proactive service, financial professionals can position themselves as indispensable allies in the management of HNWI wealth. Remember that these clients value a blend of expertise, exclusivity, and personalized attention. Cultivate these offerings within your practice, and you can build a solid foundation for attracting and retaining HNWI clients.