Family office management is responsible for overseeing the wealth management needs of high-net-worth (HNW) and ultra-high-net-worth (UHNW) families. These individuals deal with complex and diverse portfolios, multiple generations, and changing expectations.
What Is A HNW Client?
HNW clients are typically defined as accounts with over $1 million in liquid assets, excluding their primary residence. Net worth is the total value of a person’s or a family’s assets minus their liabilities. Assets include cash, investments, real estate, and other valuables. Liabilities include debts, mortgages, and other obligations.
Although they only represent 1.2% of the population, HNW clients are highly sought after clients that represent an attractive and lucrative market segment for financial advisors, wealth managers, and family office directors. According to the World Wealth Report (2021), there were 20.8 million HNW individuals worldwide in 2020, holding a total wealth of $79.6 trillion. The United States had the largest population of HNW individuals with 6.9 million, followed by Japan with 3.4 million and Germany with 1.4 million. The report also projected that the global HNW population and wealth would grow by 6.9% and 7.6% respectively per year from 2020 to 2025.
5 Keys To Managing High-Net-Worth Investment Advisors
How can your family office effectively manage their HNW clients and keep them satisfied? To help family office managers answer that question, we’ve built a list of the top five keys to manage their professional (and personal) relationship with their clients.
1. Build trust and rapport
Trust is the foundation of any successful relationship, especially when it comes to managing large amounts of money. You need to establish yourself as a trusted advisor who understands your clients’ goals, values, and preferences. You also need to communicate regularly and transparently, keeping your clients informed of their financial situation, performance, and opportunities. You can use various tools and platforms to facilitate communication, such as video calls, newsletters, webinars, and social media.
2. Deliver customized and holistic solutions
HNW and UHNW families have unique and complex needs that require tailored and comprehensive solutions. You need to offer a range of services that cover all aspects of wealth management, such as investment management, estate planning, tax optimization, philanthropy, family governance, and education. You also need to coordinate with other professionals, such as lawyers, accountants, bankers, and consultants, to ensure that your clients receive the best advice and support.
3. Understand their needs and expectations
HNW and UHNW families are not a homogeneous group. They have different backgrounds, lifestyles, preferences, and aspirations. You need to conduct thorough research and analysis to understand your clients’ profile, risk tolerance, time horizon, and objectives. You also need to anticipate their changing needs and expectations as they go through different life stages and events, such as marriage, divorce, retirement, inheritance, or succession.
4. Provide value-added services
HNW and UHNW families expect more than just financial returns from their family office director. They want you to add value to their lives by providing them with access to exclusive opportunities, networks, resources, and experiences. You can do this by leveraging your expertise, connections, and reputation in the industry. For example, you can introduce your clients to potential business partners or investors, offer them access to private deals or events, or arrange for them to meet with influential or inspiring people.
5. Focus on long-term relationships
HNW and UHNW families are looking for family office directors who can serve them for generations. They want you to be more than just a service provider; they want you to be a partner who cares about their legacy and future. You need to demonstrate your commitment and loyalty by investing in the relationship, showing genuine interest in their family history and values, and involving their children and grandchildren in the wealth management process.
Following these five key strategies will significantly enhance your ability to manage HNW and UHNW clients as a family office manager, ultimately helping them to achieve their financial goals and ensuring a mutually beneficial, long-term relationship.
