The five hats every wealth manager must wear

Ask someone to generate a new idea and you may tell them to put on their ‘thinking cap’. If we are impressed by them, we may ‘take our hat off’ to them. Or, if we want them to keep their idea a secret, we may ask them to ‘keep it under your hat’. The age-old idioms of wearing different hats in different circumstances provide a metaphorical transformation – an opportunity to play different roles. 

Wealth managers aspire to deliver holistic solutions to the affluent. The successful wealth manager must not only be the client’s technical expert, but also their counsellor, life architect, navigator, and educator – wearing different hats for different situations. 

Working alongside The OneLife Company, Scorpio Partnership surveyed more than 600 HNW Europeans to determine the needs of today’s super-wealthy and identify what the most pertinent hats are for the modern day adviser. 

The Counsellor

Large sums of wealth can reveal feelings of worry, fear, pride, ambition and happiness. The Counsellor’s Hat provides a framework through which advisers can facilitate a range of difficult and emotionally-charged conversations with clients.

For the adviser, skillfully combining professional know-how and empathy to establish a connection with the customer leads to more open dialogue and a better understanding of their circumstances. For the customer, an adviser who can explain financial nuances, while tactfully consulting on a spectrum of sensitive topics builds trust and longer term loyalty.

HNW clients do not want to simply sit back and watch their money being managed. They desire to be actively involved in a collaborative process with their wealth advisers, talking through issues .  

The Teacher

European HNWIs are thirsty for knowledge; they want to take advantage of their adviser’s expertise to improve their own understanding of financial technicalities. The Teacher’s Hat helps advisers take their client on an educational journey.

When learning to manage their wealth, more than half of European HNWIs over the age of 55 state their wealth manager is their primary education source, while younger clients prefer less structured education, such as discussions with spouses, via school curriculums, formal education programmes, and the financial press or newspapers. 

Wearing this hat requires advisers to adapt their delivery depending on their audience and the sources of information preferred by the client. 

The Architect

The Architect’s Hat helps advisers offer a support structure to clients when planning and building their futures. Every plan is bespoke and its construction is based on the client’s current circumstances as well as future aspirations.

Some planning is encouraged in advance, such as for anticipated life events. Millennials emerge as the organised front-runners in the inheritance planning race, for example, despite being furthest away from retirement. 

Of course, not all events can be foreseen and HNWIs know there will also be factors outside of their control. But just as an architect drafts several blueprints accounting for all types of unpredictable events, a wealth manager needs to think outside of the box and anticipate the potential external complications that may affect clients’ future financial situations. 

The Navigator

The Navigator’s Hat can help advisers understand their increasingly international clientele. Approximately one in three European HNWIs are looking to relocate abroad in the next five years. This number rises to two in three among the under 35s, suggesting a shift in requirements will follow suit as millennials grow older. 

The complexities of a global, fast-paced world mean wealth managers can no longer rely solely on understanding their own jurisdiction’s tax laws, regulations and upcoming trends. Their knowledge needs to metamorphose and expand to help their most international families feel secure, prepared and equipped with portable and efficient solutions.

The Technician 

The Technician’s Hat is critical, especially as HNWIs rely on their advisers to achieve higher returns on investments than they could potentially execute themselves.

The most successful advisers are those who have deep levels of expertise on a range of wealth management issues. They possess a firm desire to continue expanding and developing that knowledge so they can consistently be a few steps ahead of their clients, proactively communicating what they feel should be their next move.   

Laura Cavaciuti is an analyst at wealth management think-tank Scorpio Partnership