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HNW Clients Demand Far More Than Investment Advice

September 18, 2017

High net worth individuals have already shown they can build wealth, so advisors hoping to have them as clients must go well beyond mere investment advice, the Motley Fool writes.

For starters, the insurance needs of ultra wealthy clients are far more sophisticated than those of most investors, according to the web publication. In practice such clients will often need customized underwriting as well as specialized insurance products, such as key-person insurance and custom liability protection, the Motley Fool writes. Likewise, advisors working with high net worth clients must be able to help them protect their assets against litigation, damage and theft, according to the web publication. This requires understanding of bankruptcy protection, debtor-rights laws and creditor-protection trusts, the Motley Fool writes.

Advisors to wealthy clients must also have access to outside professionals who can provide their clients with sophisticated estate planning help, according to the publication.

But serving the ultra wealthy doesn’t end there, the Motley Fool writes. Advisors working with such clients must also be able to provide assistance with personal security against threats such as kidnappings and extortion attempts, according to the publication. And given the havoc that vast wealth can wreak on family relationships, advisors to the wealthy should be ready to step in as family counselors too, employing trained professionals to help them, the Motley Fool writes.

Meanwhile, wealthy Americans have far more to protect than ever before. Incomes of the country’s richest individuals have been growing far faster than the rest of the population’s in the past few years, according to Bloomberg’s analysis of Census Bureau data.

The newswire examined the difference between median household incomes, which mark the midpoint in income between all earners, and mean income, which takes an average of all incomes, and found a widening gap, suggesting incomes of the wealthiest outliers are growing far faster than the general population’s. Median income grew 3.2% in 2016 to $59,039, but mean income outpaced it, growing 3.6% to $83,143. The $24,104 difference in 2016 is only slightly higher than the $23,035 difference in 2015 — but it’s close to five times the gap in 1967, Bloomberg writes, proving, as the saying goes, that the rich are indeed getting richer.

And they’ve been doing particularly well since the financial crisis. The average income, adjusted for inflation, has grown 12.8% for the top 5% since 2007, according to census data cited by the newswire. Incomes for the top 20% grew more than 10% during the same period — while those earning in the bottom quintile actually had incomes drop 3.2%, according to Bloomberg.

By Alex Padalka
  • To read the Bloomberg article cited in this story, click here.
  • To read the Motley Fool article cited in this story, click here.