Elite financial advisory firms are expressing skepticism regarding the effectiveness of artificial intelligence (AI) tools for identifying and acquiring ultra-high-net-worth (UHNW) clients. While market data firms promote AI as a key solution, leaders in the advisory sector indicate these tools have not proven to be game-changers.
Challenges with AI Prospecting
Matthew Fleissig, CEO and co-founder of Pathstone, an investor advisory firm, stated that UHNW clients with over $100 million are unlikely to respond to cold emails generated by AI. He noted that AI-powered databases often aggregate public or purchasable data, a task firms can already manage internally. An executive from a high-end national Registered Investment Advisor (RIA), who requested anonymity, indicated that many AI prospecting tools are built on widely available large language models, offering minimal competitive advantage over in-house solutions.
Andrew Douglass, head of growth at AlTi Tiedemann Global, highlighted that using non-exclusive data for cold outreach typically leads to clients who already have advisors or have been contacted by numerous other firms.
Preferred Client Acquisition Strategies
Advisory firm leaders emphasize that personal relationships and demonstrated value are crucial for attracting UHNW clients.
- Referrals and Personal Networks: Pathstone's Fleissig cited instances where exceptional personal service, such as arranging a private jet for a client in an urgent situation, fosters referrals. AlTi Tiedemann Global reports that client referrals and personal networks account for 40% and 30% of their organic growth, respectively, over the past five years.
- Networking with Experts: AlTi Tiedemann Global attributes another 30% of its growth to networking with professionals like trusts and estates lawyers and accountants, who often work with clients experiencing liquidity events.
- Subject Matter Expertise: Douglass stressed the importance of being recognized as a subject matter expert and consistently engaging with the professional community, rather than solely targeting clients based on asset minimums.
Growth Philosophy
While word-of-mouth referrals can be a slow process, with sales cycles extending up to 12 months or longer, firms like AlTi Global prioritize the quality of clients over quantity. Their annual target for organic growth in the U.S. is 25 to 30 new clients, aiming to add approximately $1.5 billion to $2 billion in new assets.