The next decade is poised for a remarkable shift as trillions of dollars in liquidity from the sale of small and medium-sized businesses (SMBs) are projected to flood the market. For wealth advisors, this presents both an opportunity and a challenge. If proactive steps aren’t taken now, many advisors could find themselves competing for their own customers when these businesses finally achieve liquidity. But how do advisors justify building a fence around their clients' future wealth when that will take time and investment — neither of which they have?
The Dilemma of Immediate Needs vs. Future Potential:
Wealth advisors tend to focus on liquid assets, often because their clients’ businesses aren’t bearing the fruits of investment in a traditional sense. Each client interaction must deliver immediate value, which is increasingly challenging when you’re not aware of the potential future liquidity locked away in a client’s business. It raises an uncomfortable question: how can you justify building protective measures today when the growth isn’t yet visible?
I get mocked regularly for my use of analogies. Somehow, this one made it past my marketing team. Imagine a patch of land that looks barren on the surface. For over 20 years, your clients have diligently planted seeds, nurturing their businesses with the hope that roots will take hold and yield a bountiful harvest. However, while those plants are growing, your immediate focus on liquid assets can lead you to overlook these long-term investments.
The Importance of Proactive Fence Building:
So, why should you build a fence around these invisible assets? The truth is, you can’t afford not to. If you wait until those seedlings break the surface and start yielding wealth, you will be positioning yourself in a competitive scramble for your clients' business. It’s a classic case of being “too late to the party,” but in this case, you thought you were the only one invited. Those fruitful opportunities won’t remain unnoticed, and competition will eagerly move in and crash your one person party.
Your clients' businesses will attract attention as they become liquid, so it's crucial to build a protective boundary now. By doing so, you safeguard not only your relationship with your clients but also the wealth they have built over years of hard work. The bigger the potential outcome, the larger the fence you need to build.
Harnessing Technology to Build and Maintain Your Fence:
The question then arises: how do you build this protective fence when time is finite, capacity is limited, and the focus remains heavily on existing liquid customers? The solution lies in embracing technology.
By leveraging advanced tools, you can gain visibility into your clients’ business operations. Understanding the growth trajectory of their investments allows you to anticipate when the plants will break through. Moreover, technology can provide notifications on key milestones, enabling you to offer timely assistance in not just strengthening, but also protecting the burgeoning assets your clients have painstakingly nurtured.
This approach does more than protect your clients; it fortifies your relationship with them. When you're attuned to their growth and proactive in offering support, you're positioning yourself as a trusted advisor and protector, ensuring that you’re the first point of contact when liquidity emerges. It prevents competitors from swooping in and convincing your clients to shift their loyalty.
Building a fence today may seem like a stretch when visible growth feels far off. However, recognizing the potential under the surface and investing the time and resources into maintaining these relationships is vital. By doing so, you establish yourself as the go-to advisor for your clients, ensuring that when the fruits of their labor finally appear, they’ll look to you for guidance and support.
In the ever-changing landscape of wealth management, those who anticipate and prepare will be the ones who capitalize on the coming tide of liquidity. Take the initiative now to protect your clients’ futures, and you will not only ensure your own success but also reinforce the trust and loyalty that your clients have placed in you over the years.
Author: Trevor Greenway