Godfathers, feeding tigers, à la carte: how RIAs can win UHNW clients

June 22, 2023 7:02 PM

Love honeymoon a beach vacation concept.

Ash Chopra's client had a grueling experience waiting for his child to be seen in an emergency room, where it can sometimes take hours for patients to get help.

It was a humbling moment for the client, who was "an extremely wealthy man," Chopra said.

The client came to Chopra after the fact. "He said, 'I never want to have that experience ever again, Ash. How can we fix that?'"

For Chopra, the founder and CEO of registered investment advisor Syon Capital, which he launched in October upon leaving Merrill Private Wealth Management, such questions — seemingly irrelevant to a traditional financial advisor's job of managing investments — are par for the course in his practice of serving ultrahigh net worth clients.

The number of ultrahigh net worth families with a net worth over $30 million has been growing, with an estimated 101,240 of them in the United States as of 2021, and their lives are becoming more complex. And like Chopra's client, they often turn to advisors for solutions in all areas.

Chopra spoke at an industry panel event Wednesday hosted by VettaFi on serving ultrahigh net worth clients in the RIA world, and described his experience offering bespoke services to those clients. He was joined by Kelly Maregni, the president of multifamily office and RIA Pathstone. Paul Ferguson, the managing director at Schwab Advisor Family Office, moderated. Syon and Pathstone are both clients of Schwab Advisor Services, an RIA-serving custody business at Charles Schwab that includes Ferguson's unit.

"Clients come to us for more than just financial advice and guidance," Chopra said on the panel, adding that the management of their wealth at this level often extends to "all-encompassing" support for "their culture, their education, their lifestyle."

In the case above, Chopra decided to partner with a concierge medical service going forward so that clients could get instant personal medical support during a health emergency. In the case of one client, who Chopra was vacationing with in Hawaii, it came in handy as the man broke his neck on the beach, became paralyzed and nearly drowned — but fortunately was able to get quickly airlifted to Honolulu for emergency surgery "to put him back together."

That's the level of attention it takes to stay in the game with the richest clients now, the panelists said.

Ferguson agreed, citing interviews he had conducted in the field where he found that successful multifamily offices are always "the first call for their clients. They are that trusted advisor, very first call for everything, financial and non-financial."

For more insights from the panel on how to attract and keep the business of these elites, scroll down our cardshow.

Attract specialized talent, get them to stay

One of the keys to connecting with the ultrawealthy is to have talent that is accustomed to interacting with them, since the service model they require is much more personalized and demanding than the typical client relationship in wealth management. That means hiring ultrahigh net worth advisors to your firm.

"When you find individuals that have a desire to work in this space, but also have the expertise, it's really important that you not only foster their growth, retain them, it's also really important to be able to attract them," Maregni said, adding that Pathstone prioritizes this and offers many employees ownership of the business — so out of 350 team members, currently 180 are shareholders at Pathstone.

Having inferior or unqualified employees can be a major business liability, Chopra said.

"Slippage, mistakes, not having expertise in a certain area can be very damaging to not just that client, but also, frankly, to that reputation that you're trying to build up of being a very bespoke service," Chopra said.

Be the best at what you do, outsource the rest

Related to the importance of selectivity when it comes to putting together a team, advisors in this environment will be well-served to choose a speciality area and admit when they can't do it all — because clients will move on if they're not getting best-in-class service at every turn.

"Be very clear in what your value proposition is, and (do) not deviate from that. If you start to deviate, that's where you're taking business risks," Chopra said. In his own work, Chopra — a former engineer — specializes in helping entrepreneurs.

"We are set up for dealing with some of the decisions that somebody has to make, all the way from starting from the founding of a company to the endpoint of liquidating, selling or taking it public," he said, adding that he tends to begin working with clients between three and 12 months before a liquidity event.

"Once we start working with them, then we are particularly helpful in their next founding, and the next business, and so how they sort of expand and multiply their portfolio of assets," Chopra said, adding that at some point his team becomes "the consiglieri of the family after they've made this first initial leap."

Provide 'à la carte' services

On the other hand, it's a competitive advantage to offer access to as many services as possible through one's own practice, which Maregni said Pathstone strives to do.

"We are truly an à la carte offering," Maregni said. Clients may start at Pathstone seeking services related to taxes, for example, but later find they need help with "accounting, bill pay, concierge services" — all of which her firm conveniently also offers, in addition to outsourced services through partners. She added that clients also want to network with other wealthy families, which Pathstone facilitates by coordinating through special get-togethers for them.

Without this breadth of offerings, firms risk losing their clients to someone else if the client or their multigenerational family has other needs that come up.

It was the flexibility of being able to pick and choose his own providers and optimize for those best in each area — as well as freedom from conflicts at Merrill — that prompted Chopra to leave for independence, he said.

Ferguson observed that in the past 30 years, new complications for the ultrarich have arisen — "things like cybersecurity risk and reputation risk and privacy, as well as all the complicated investment structures … and in addition to that all the tax and estate planning structures, the entities and the trust and the legal structures." That means more needs to be delivered to them on each of those fronts.

Find the Godfather clients

Chopra said that in general, all his new clients tend to come from a client referral or a trusted professional in the industry known as a "center of influence" — typically, an attorney or accountant.

But in particular, over 80% of his new client referrals come from "godfather clients," who he focuses on cultivating relationships with — a concept he has taken with him from his time in the wirehouse world.

"There's really three things that we look for in order to categorize somebody as a godfather," Chopra said. The person has significant wealth, they are "grateful" and generous to family members and charities, and they are influential.

"If you're missing just one of them — if they're not influential, but they're wealthy and grateful — nobody's going to actually listen to them," Chopra said.

Don't let the tiger eat you

Many advisors are still uncertain about using some forms of new technology in their work with clients — but that's become increasingly important in engaging with the ultrarich, Ferguson said.

"(There's) a lot of really high-end technology providers who are focused on ultrahigh net worth solutions right now," he said.

Yet in a recent Arizent survey of 394 professionals across wealth management firms in the industry, 69% of respondents said they were not using artificial intelligence at the moment in their business. Using tech including AI is likely to become increasingly essential to survival in the industry, experts predict, especially when it comes to offering white-glove services at scale.

Chopra said advisors have to keep up with tech advances but don't have to reinvent the wheel when it comes to cutting-edge products that can help them deliver what clients expect — "what we've spent our time on is trying to figure out which tech stack makes the most sense.

"I think of technology as a tiger in the room," Chopra said. "It's a beautiful, very powerful animal, but if you're not feeding it, and if you're not controlling it right, it will eat you."