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A version of this article first appeared in CNBC's Inside Wealth newsletter with Robert Frank, a weekly guide for high-net-worth investors and consumers. Register to receive future issues, directly to your inbox.
Market data companies have been pitching artificial intelligence as the key to locating elusive ultra-high net worth clients. But leaders at elite advisory firms told Inside Wealth they're not convinced.
For starters, while AI products can reveal data and contact information of ultra-high net worth individuals, that's only half the battle.
“When we're looking for clients with more than $100 million, it's hard for me to think that they're going to get a cold email and say, 'Yeah, here's my balance sheet,'” said Matthew Fleissig, CEO and co-founder of Pathstone, a registered investor advisor with $182 billion in client assets.
Instead, he said the referrals come when the company works on a more personal level, like when Pathstone once arranged a private jet in less than an hour for a client who needed to get from New Orleans to Albany, New York, before his mother died.
“That kind of thing is how we can grow the business,” he said. “We create moments that matter.”
Fleissig said AI for customer 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 pull the database,” he said. “Most of the time, these are very similar strategies of adding data sources that are public or that you can pay for, and trying to feed lists of people. We, at this point, can do it ourselves.”
A growth executive at a top-level national RIA told Inside Wealth that he had conducted at least 20 demonstrations of AI client prospecting tools in the past six months and said most are based on large, widely available language models like Claude and GPT.
“You're putting a coat of paint on a top five LLM and selling the fact that 'Oh, our data is better,'” said the executive, who requested anonymity to discuss customer acquisition strategies. “Do I pay them $100,000 or 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 is 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 have accounted for 40% and 30%, respectively, of AlTi's organic growth, he said. Another 30% comes from networking with experts such as trust and estate attorneys and accountants who are likely to work with clients going through a liquidity event, such as inheriting a fortune or selling a business.
“Most people come out and say, 'Our minimums are $25 million, so anyone who has $25 million in liquid assets is a great client.' We don't think that's a strategy that will ultimately work,” Douglass said, calling from Heckerling's estate planning conference in Orlando, Florida. “We believe that being truly seen in the market as a subject matter expert, consistently showing up in 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, if not longer.
However, warnings focused on the ultra-rich 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 $1.5 billion to $2 billion in new assets.
Eden Ovadia, CEO of Finny, an AI customer prospecting startup, said she is used to encountering skepticism. Ovadia, who co-founded Finny in late 2023, said she views AI prospecting as a complement to traditional outreach rather than a replacement.
He said a popular way for high-level advisors to use Finny is to promote exclusive events to the right audience. For example, an advisor who wants to invite potential clients 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 can be used to identify clients who might need advice after a life transition, such as finding people who recently purchased property valued at at least $5 million near Jackson Hole, Wyoming.
“There's definitely a bit of cynicism that we have to overcome when we talk to ultra-high-net-worth companies and they tell us, 'No, we don't do AI. We want everything to feel really personalized, really white,'” he said. “I couldn't agree more. The idea here is that we can uncover more data about your customers or prospects than you realize.”
Finny can also be used to monitor existing clients for signs they may be unhappy, such as seeking 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 inbound customer queries worth at least $100 million from AI search engines.
Douglass said that while AI has not 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 how it will work,” he said.
