HNW and UHNW Clients See Opportunities for Financial Gain and Supporting Mission-Driven Investing Opportunities in the Venture Capital Space – How RIAs and Other Independent FA Businesses Can Support Clients in This Space
I’ve been working with financial advisors my entire professional career, but the most memorable ones for me are hyper focused on a niche.
Every person in the firm, from the CEO or lead advisor, all the way down the organization intimately knows the needs of their clients. They understand each client to the point of predicting personal, professional and financial stages of development.
When I began to teach financial advisors how to grow their businesses, I encouraged advisors to find the clients they love, who will love them – their niche – and go deep into serving the needs of that group of people.
Generally speaking, financial advisors who get deep into a specific service for a specific demographic are able to grow from client referrals, with clients organically develop the business for the advisor. Put simply, you don’t have to ask for referrals when you’re serving your clients expertly.
Why Haven’t RIAs and Other Independent FA Businesses Taken the Plunge Into VC?
But there’s a problem that’s intensifying for RIA and independent financial advisors who support high net worth and ultra-high net worth individuals and families: Once an investor’s future is generally secure, they often want to use their wealth to make some kind of lasting impact.
But public investments are less and less attractive to investors seeking a meaningful story that inspires hope.
You might think this creates a very natural opportunity for advisors serving these types of clients to explore venture capital as an asset class, given how VC opportunities are so frequently at the intersection of potential value creation and mission-driven goals that go beyond just making money.
But here’s the reality: Most financial advisors and RIA’s don’t advise on venture capital because it’s either too difficult to integrate into their practice or they lack the marketing, compliance and legal support to do this under their ADV.
Getting RIAs and Other Independent FA Businesses “VC-Ready”
For HNW and UHNW advisory clients, investing in venture capital is not a matter of if but when. For most of these investments, they’re happening outside of their financial advisor’s purview. We believe clients and advisors should have holistic conversations about the real opportunities in the private market and that those conversations should be led by the advisor.
In an ideal world, clients should be able to fully loop in their trusted financial advisors to make the entire venture capital investments exploration process an integral part of the ongoing financial advice journey.
To make this happen, RIA firms and other independent financial advisor businesses who work with HNW and UHNW clients should consider partnering with expert firms who fully understand how to align wealth managers with private investment solutions.
In particular, RIAs should look for expert resources who can help them provide an onramp for investors who want to enter the private investment space, encompassing accessible and friendly experiences for novices, without sacrificing proper due diligence and education.
Additionally, RIAs and other independent financial advisors should also be on the lookout for partners who can help them develop a framework for how to seamlessly diversify into alternative investments – including welcoming more venture capital into their investment offerings.
Top Questions to Get Started
As you consider how Venture should be a part of your investment narrative, here are a few questions you will need to answer:
- How many of my clients have already participated in venture capital?
- How many of my clients would be interested if I were to provide them access to venture investments?
- How can venture investing diversify my firm’s overall value add?
- How can venture capital provide my firm access to a type of client we may not currently attract?
Don’t Let Complexity Drive Inertia
Retail clients will always need solid advisors who understand their financial needs and desires. Serving clients by anticipating the potential issues they will encounter and designing solutions for them is what differentiates elite advisors.
The most impressive advisors don’t let complication, the fear of the unknown or perception of difficulty keep them from inspiring their clients with incomparable service and deep knowledge.
Elite advisors are finding ways to broaden their investment narrative inside the context of a methodical plan and a disciplined approach.