Most practices can’t serve the wealthiest clients. Here’s what it takes

Working with UHNW clients remains a “fool’s errand” for most RIAs and other wealth management firms due to the capital it takes for firms to serve them effectively and the resulting low margins, though, according to the founder of strategy and practice management firm J.H. McLaughlin. Practices that can help the clients navigate their particular complexities will win out.

Prior to the current turmoil brought on by the coronavirus, McLaughlin also noted that the segment was expanding substantially. The co-founder of the UHNW Institute and consultant to wealth management firms, as well as private banks, trusts, single and multi-family offices, shared four principles of success for all firms. He also discussed how three general characteristics of businesses equipped for the future — scale, speed and intimacy — apply to financial advisor practices.

Jamie McLaughlin

“The nature of having that level of relationship with a client, particularly for the [UHNW], really is the breeding ground for greatness of firms,” McLaughlin says. “And it’s a cultural ethos that would be required to be in a position to win that level of allegiance from a client who’s looking at you as a partner, as opposed to a vendor. That is the biggest challenge for this segment.”