Wanting Wealthier Clients is Not a Strategy

Ask almost any financial planning business what its growth plans are and wealthier clients will feature somewhere in the answer. Ask who is responsible for that happening and the answer is nearly always the advisors, which is where the trouble starts.

Growth in this industry is usually counted rather than examined. More clients, more advisors, more assets under management. A business serving a thousand clients, versus a business serving two hundred clients, can turn the same annual income, while being nothing alike, and only one of them has to keep replacing what it loses. Adding clients at the value you already serve is a capacity problem, solved with marketing and hiring. Serving wealthier clients is not, and the distinction is important because businesses routinely apply the first solution to the second problem.

The industry calls the second one 'moving upmarket' and this is not a conversation about the cream of the crop only. Upmarket means one step up from wherever an advisor happens to be standing: retail to affluent, affluent to high net worth, high net worth to ultra high net worth and family office. The principle holds at every level because the client one step up is more complex, expects more and expects it faster. Most advisors in most businesses have a step directly in front of them right now but what they don't have is a way of taking it.

Net asset value is the least interesting thing about the client one step up, and treating it as the main difference is the assumption most of these attempts are built on. Some of these clients hold everything inside a business they will not sell; others have been liquid and diversified for years. What they share is not a profile but rather a posture: they are commercially literate, often because they built something themselves, and they can tell within a single meeting whether they have been uniquely considered or fitted to a template.

This is why good advice alone is not enough. Every advisor in the business gives some version of stock standard advice, and that is precisely the difficulty: a strategy resting on the quality of the advice rests on the one thing every competitor also has.

So when an advisor struggles to move up, the conclusion drawn is usually about the advisor. He lacked the confidence, or the polish, or the network. It is worth looking at what actually stopped him, because very little of it was under his complete control.

He was trained for the level below. Whatever the step, the training an advisor receives is the training everyone receives, and the industry has built excellent technical education aimed at the middle of the market with almost nothing above it. That gap is not going to be closed by the industry on any useful timescale, which places it squarely with the business: build that next step yourself or accept that it will not happen.

The advisor could not recommend what he didn't know existed. Offshore structuring, global trusts, debt re-engineering where a client borrows against a concentrated holding rather than selling it. None of this is beyond a competent advisor's technical ability, and the skill set is usually present while the awareness is not. For the business it is also a question of access: which specialists it has relationships with, what it can actually execute, and who an advisor calls when a client asks something nobody there has been asked before.

He was paid for product, so he thought in product terms. An advisor remunerated for placing product will keep reaching for a solution that fits the product rather than a structure that fits the problem, and no amount of encouragement will change that while the incentive points the other way. It is a design outcome, and the design belongs to leadership.

Also, nobody decided who would take his existing clients as he moves upmarket. This is the one most consistently skipped. An advisor cannot move up while keeping everyone he already has, and a business that has not answered that question will watch revenue dip, conclude that moving upmarket does not work, and subtly return to what it was doing before.

None of those four are personal failings, and all four are owned by the business.

There is a part that genuinely belongs to the advisor and it is smaller and less dramatic than the industry likes to suggest. Two observations sit together here: the difference at the upper end is depth of expertise, and it is entirely possible to serve a far more sophisticated client while remaining recognisably the same person, provided the preparation rises to meet them. One private banker, asked what he changed when he began dealing with clients worth tens of millions, said he remained himself and simply prepared harder. For a client with interests in shipping, he spent a weekend learning the sector before they met.

Neither observation describes an overhaul of personality. What rises is the standard, and a standard held across a group of advisors is a leadership act rather than a private one. Businesses that succeed at this tend to be the ones where the expectation was set and maintained from the top, rather than left to whoever felt motivated.

It would be dishonest to present any of this as straightforward. Each step up is more competitive, more demanding of real expertise and considerably harder to scale, which is why so many attempts at the family office model come apart. The businesses that manage it have usually made peace with the trade-off rather than pretending it does not exist: build a properly scalable process, outsource the investment expertise where that makes sense, and put every hour it frees up into understanding the client.

That last point carries further than it appears to. The higher the step, the more the client stops being a client and becomes a family, and the questions turn from accumulation to transfer: who receives what, through which structure, and whether the next generation is equipped to hold it. A business unable to hold that conversation loses the family at the exact moment the wealth moves, having never had a relationship with anyone in it except the person who died.

Capacity can be hired. A business can always find another advisor and another hundred clients. What it cannot buy is the reason a family stays after the person who built the wealth is gone.