The Rich Know Each Other

In your local community, the people with money are not strangers. You have heard “birds of a feather flock together.” That explains the logic of country clubs. Adam Smith saw something darker. In The Wealth of Nations, he said: “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” (1) Regardless of the analogy, the great and the good in your town or neighborhood know each other.

As a professional, you are presented with three opportunities.

  1. You can join the right organizations on your own;
  2. You can ask a current client on the inside to open doors;
  3. You can ask clients for introductions to their peers.

How Are You Going to Get in Front of the Right People?

One of the best ways to get in front of wealthy people is to become part of their world. This involves joining the right organizations, serving on boards and writing checks. If you are willing to invest the time and treasure required, you will find fewer competitors on the playing field than you might imagine. Many other advisors are reluctant to spend their own money building their business. They expect their firm to pay for it.

1. Contribute to the right charities. Your community has many worthy causes. Several are high profile. One evening, I saw one of the high-profile donors mention to another: “There are about 20 of us. We manage to support every major nonprofit in town.”

Desired result: Although each organization might only hold one or two events a year, this means the top dozen organizations collectively hold 12-24 events annually. The same heavy hitters are usually at each one.

2. Attend auctions. The wealthy are often collectors. This benefits them in many ways. Their art collections often double as an investment vehicle. They actively buy and sell. From time to time, they lend a painting to a museum. This gives them access to other HNW circles. Some people might have inherited pieces, but the “litmus test” is auction attendance.

Desired result: If you are a collector yourself and live in a city with a global auction house presence, you know they have previews before major auctions. The actual auctions are often high-profile events. Food and drink are often served. There is plenty of opportunity to mingle. The wealthy collector may not actually engage in bidding themselves. They often have a proxy or rely on bids placed in advance, similar to limit orders.

3. Alumni and college related events. This can be addressed on a few levels. If you went to an Ivy League university, they often have brick and mortar alumni clubs in major cities. The Harvard Club and the Yale Club in NYC are two examples. The University Club, not connected to one single school, is a third. Your school likely has an official alumni club in most major cities. Although it has no fixed abode, they often have lunches and special events.

Desired result: The school does a fine job of cultivating donors. The alumni clubs play a role in making social contacts. Wealthy alumni donors are often involved with these events, so they can stay close to the school and see how their money is being spent. If you are a fellow graduate or club member, you have a connection. It’s often called “The Old School Tie.”

4. Dine at the right restaurants. The rich are often older. Between running their businesses and taking vacations, they eat fewer meals at home. If you are visiting their home, it is not uncommon to hear: “Kitchen for resale purposes only.” You can even buy little signs with similar slogans. The local movers and shakers have a handful of restaurants they frequent. They are often tough to get into, although finding a seat at the bar can be easier. They greet each other and table hop.

Desired result: This is an expensive way to dine out, but you are seen in the right places. If you spend time at the bar, you can chat with people you have met before and establish a nodding relationship with others. It takes time, but this is a first step.

5. Join the right country club. This assumes you live outside the city center. Although golf might be on decline in popularity, country clubs are often social clubs with plenty of activities. Groucho Marx famously said: “I won’t join any club that would have me as a member.” Certain clubs pride themselves on exclusivity and are almost impossible to join.

Desired result: If you get into the right one, you can get to know people in an exclusive environment with significant barriers to entry.

6. Become a political donor. This is a category that can have lots of rules attached. As I recall, financial advisors are restricted from contributing to candidates in state and local elections because financial services firms are often involved in municipal bond offerings. Federal elections should be a different matter, although letting your firm’s Compliance people know is a good idea. The candidates often have events at different donation price points.

Desired result: Campaign contributions are not tax deductible because they are not charitable gifts. You should meet wealthy donors with an interest in seeing their candidate elected. Big donors with the same political beliefs often know each other.

Once you get inside their circles, you realize it’s a small world. People know each other and see each other often.

Related: What Are Obstacles To Doing Business With HNW Individuals?