D3sign | Instant | Getty Images
A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide for wealthy investors and consumers. Register to receive future editions, straight to your inbox.
Market data companies are touting artificial intelligence as the key to locating elusive ultra-high-net-worth clients. But executives at elite advisory firms told Inside Wealth they’re not sold.
For starters, while AI products can surface data and contact details on high-net-worth individuals, that’s only half the battle.
“When we’re looking for clients with more than $100 million, I find it hard to imagine that they’re going to respond to a cold email and say, ‘Yes, here’s my balance sheet,’” said Matthew Fleissig, CEO and co-founder of Pathstone, a registered investor advisory firm with $182 billion in client assets.
Instead, he said the referrals come when the company works on a more personal level, such as when Pathstone secured a private jet in less than an hour for a client who needed to travel from New Orleans to Albany, New York, before his mother died.
“Those kinds of things are how we can grow our business,” he said. “We create moments that matter.”
Fleissig said AI for prospecting hasn’t been a game-changer like startups claim.
“These databases have been around forever, and now people have added an AI overlay to be able to mine the database,” he said. “Most of the time, these are very similar strategies of aggregating public or paid data sources and trying to give you lists of people. At that point, we can do that ourselves.”
A head of growth at a high-end national RIA told Inside Wealth that he’s done at least 20 demos of AI client prospecting tools in the past six months and that most are built on large, widely available language models like Claude and GPT.
“You’re putting a coat of paint on one of the top five LLMs and selling it by saying, ‘Oh, our information is better,'” said the executive, who requested anonymity to talk about customer acquisition strategies. “Do I pay them $100,000 or do I talk to my IT team and find a way to do it for pennies on the dollar? »
Andrew Douglass, head of growth at AlTi Tiedemann Global, said there was little competitive advantage in using non-proprietary data. When the independent wealth management firm used to cold call clients from these types of databases, the client usually already had an advisor or had already been called by dozens of other firms, he said.
Over the past five years, customer referrals and personal networks accounted for 40% and 30% of AlTi’s organic growth, respectively, he said. Another 30% comes from networking with experts such as trust and estate lawyers and accountants who are likely to work with clients facing a liquidity event, such as inheriting a fortune or selling a business.
“Most people say, ‘Our minimums are $25 million, so anyone with $25 million in liquid assets is a great client.’ We don’t think that’s a strategy that ultimately works,” Douglass said, calling from the Heckerling Estate Planning Conference in Orlando, Florida. “We believe that really being seen in the marketplace as a subject matter expert, showing up regularly at places like Heckerling and where the professional community is and being able to provide value, is the most effective way to grow the business.”
Word of mouth referrals are not inherently scalable and can be slow. Douglass said the sales cycle with a high-net-worth client can take 12 months or more.
However, reviews focused on the ultra-wealthy like AlTi Global look for quality, not quantity, he said. The company’s annual organic growth goal is 25 to 30 new clients in the United States, which could add approximately $1.5 billion to $2 billion in new assets.
Eden Ovadia, CEO of Finny, an AI-powered prospecting startup, said she’s used to skepticism. Ovadia, who co-founded Finny in late 2023, said she sees AI prospecting as a complement to traditional outreach rather than a replacement.
She said a popular way high-end advisors use Finny is to promote exclusive events to the right audience. For example, an advisor looking to invite prospects to a suite at a Miami Heat game can use Finny to identify people who work in real estate and are interested in the team. Ovadia also said Finny could be used to identify clients who might need advice after a life transition, such as finding people who recently purchased property worth at least $5 million near Jackson Hole, Wyoming.
“There’s definitely a bit of cynicism that we have to overcome when we talk to high net worth companies and they say, ‘No, we don’t do AI. We want everything to be really personalized, really white glove,'” she said. “I couldn’t agree more. The idea here is that we can actually surface more data about your customers or prospects than you think.”
Finny can also be used to keep tabs on existing customers and detect signs that they might be unhappy, such as looking for investment advice online, Ovadia said.
Fleissig said he’s most excited about customers finding Pathstone through AI platforms like Gemini and ChatGPT. In the past two weeks, he said, Pathstone has received five customer inquiries worth at least $100 million from AI search engines.
Douglass said that while AI hasn’t changed the way AlTi Global finds new business, he is open-minded.
“If someone has a better mousetrap, we’re certainly excited about what the market will look like and what it will bring,” he said.