June 25, 2017

An Unexpected Opportunity? Financial Services for Millionaires


Savvy entrepreneurs are starting financial services for the wealthy to manage manage assets, investments, taxes, as well as other extraneous needs.

Everyone knows it is hard to get rich, but it can be even harder to stay rich. Entrepreneurs have visions success and wealth, but few are prepared when success actually finds them. It can be difficult to suddenly manage assets, investments, and tax planning — and yet the financial services industry has struggled to provide the kind of white glove service that low level millionaires need.

And there are a lot of low level millionaires. In fact, the number of millionaires in the U.S. has more than doubled since the mid-1990s. Some estimates project that there will be as many as 18 million people worth at least $1 million by 2021.

To begin with, we have to understand that there are several levels of wealth. You have your well-off group of people, which we can call anyone who is worth less than a couple million dollars, but who are also distinctly above the middle class. At the upper echelons, you have individuals who are worth $100 million or more. Between those two groups of people is a gray area for financial services.

Financial Services for the Wealthy

The ultra rich have long used a model called the family office or multi-family office, which is an office of financial experts that serves a single rich family or a small group of them. These entities manage assets, investments, taxes, as well as other extraneous needs like managing travel, private schooling, estate transfers, and so on.

Beneath the ultra rich and above the well-off is a growing contingent of Americans who cannot justify paying for a family office (which can cost well over $1 million annually) but whose needs are not met by traditional wealth management firms. These individuals have assets and investments that need active monitoring, experts to conduct careful tax planning, and a team that is invested in protecting and growing their wealth.

That need has given rise to a new model of financial services for America’s wealthy and this is what successful business professionals (and those who are working hard to get there) need to know:

Private Banks are Backing Off

Numerous banks are increasing the threshold for participating in their private banking services. JPMorgan Chase doubled its minimum from $5 million to $10 million last year, simultaneously laying off numerous relationship managers. Standard Charter recently made a similar move, raising its minimum from $2 million to $5 million and signaling it would begin targeting clients with investable assets in the $30 million range.

This move is leaving an increasing number of people on their own to figure out how to manage their wealth by piecing together a variety of services.

“The best anyone caught in this position can do is piece meal together services from an array of professionals – tax experts, investment advisors, and so on,” explains David Miller, founder and CEO of PeachCap, an innovative wealth management company. “Using professionals from several different firms actually makes the situation worse, because open collaboration between all these people is not a practical solution.”

Entrepreneurs are Stepping In

Of course entrepreneurs see problems as opportunities, and entrepreneurs are scrambling to fill the growing void in high end financial services. The way forward is clear: top shelf services should be accessible to larger circles of people. Just like the computer or the cell phone used to be expensive technology exclusively for the uber-wealthy, white glove financial services should get the entrepreneurial treatment and become more affordable.

“The traditional family office model can be retooled to make it more accessible to more people,” says Miller. “By centralizing back office support and empowering CPAs and financial advisors with the tools they need to manage more complex tax, accounting, and wealth management strategies, top shelf financial and tax services can be extended to more people.”

Efficiency models can have the same effect on the top of the financial market that robo advisors are having at the bottom – personalized attention and improved outcomes.

The Democratized Family Office

The key is to empower wider networks of financial professionals to serve their increasingly wealthy clients. A single CPA may have a client hit pay dirt in Silicon Valley and find herself unable to provide all of the required services of this new millionaire. That includes careful tax planning, estate planning, and higher level investing strategies in addition to the consultation already being provided.

“Wealthy individuals need specialized service, which can be challenging to deliver as a single CPA or financial advisor,” explains Miller. “By partnering with a backend resource, they have access to an array of tools and resources that allow them to better serve those clients. The financial industry’s response to the influx of wealthy individuals should be to increase the availability of quality services, not force clients to choose between quality and affordability.”

Entrepreneurs who want to make a difference in this space should keep two outcomes in mind: enhanced service for clients, and better support options for financial management professionals. These are the two keys to filling the void at the top end of the market.

Entrepreneurs Photo via Shutterstock

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Jeff Charles


Jeff Charles Jeff Charles is the founder of Artisan Owl Media, an Austin-based content marketing agency that specializes in helping professional service firms increase their influence and earn more clients.

2 Reactions

  1. Aira Bongco

    Does this mean that wealth is now becoming the norm? Is it now being distributed to a lot of people? The market has become significantly huge instead of small and exclusive.

  2. I agree that this is a large area of opportunity for entrepreneurs. I think a big challenge for advisors serving this demographic are reaching them to begin with, so customized marketing services, both online and offline, that are scalable yet offer messaging customized to that demographic and firm’s brand are needed.

    Efficiency in maintaining these client relationships is also needed.

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