The team approach makes sense for ultra high-net-worth clients, who often have complex financial needs that can involve international holdings, family businesses, complicated estate plans and illiquid assets, according to a recent advisor report from independent research firm Morningstar.
Understanding there just aren't enough high-net-worth prospects, financial advisors continue to seek out "smaller investors" to try to expand existing businesses. To be sure, the competition for new clients is steep.
To acquire new clients, smaller advisory firms should look at the 50- to 69-year-old demographic for individuals with investable assets of $2 million to $5 million. This group is nearing retirement, but only 40 percent of them have a formal retirement income plan, according to Cerulli.
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Another "advice opportunity" comprises the 4.7 million households of people in their 40s with investable assets of $100,000 to $500,000. This group controls more than $1 trillion in assets and is entering its peak earning years.
"Advisors are struggling with a crisis of differentiation," said Michael Kitces, a certified financial planner and director of research for the Pinnacle Group.
"Everyone is selling themselves as a fee-based certified financial planner offering customization," he said.