Why It Takes a Wealth-Management Team

Phoenix: "I think it's time that we focus on growing the practice" stated Mark. "We do a great job for our clients, we have good policies and procedures, and last year we focused on upgrading and transitioning our clients to where we were truly the "go-to" financial coordinator -- and it was a good year. But this year we need to focus on more affluent clients."

Dallas: "Does it really require a team to survive in the 21st century?" asked Marty following a talk I presented on our latest affluent research.

By now, you should know that our sweet spot at the Oechsli Institute is the affluent. All of our research is geared towards better understanding the affluent so we can help you better attract, service and retain loyal affluent clients. And before I could respond, Marty answered his own question: "I know, I need to form a team."

It takes a team to meet the needs of today's affluent. Which is why so much attention is being directed at the idea of building a successful 21st Century Wealth Management Team. This is nothing more than striving to provide both the products and services the affluent want and need. It's no coincidence that, in today's vernacular, this has become know as "comprehensive wealth management."

Everyone recognizes that the affluent no longer want someone to simply "manage" their investments or "make them money." Sure, they might talk big, but our research tells us quite clearly that the affluent want to protect what they have (boring risk-tolerant returns) and minimize their tax bite. Here is where everything tends to get rather complex for a solo advisor who's been handling only investments. Why? You might ask. Because meeting the needs of the affluent requires change. And we all know that change can be very difficult.

The affluent are looking for someone to oversee the multidimensional aspects of their family's financial affairs. Whether this is you, their former insurance agent, their CPA, the person handling their firm's 401(k), a financial planner, their personal banker or their attorney, it doesn't matter because they don't have a clue where to find this person. This is your big advantage -- if you make the necessary changes in your practice to be what the affluent want.

Really, none of this is very complicated. All that is required is for you to work with them (each individual family) on a personal level, address the needs that are unique to them, work with them to develop a set of priorities and then oversee the execution of these priorities with your team of experts.

Consider the following wealth-management services …

  • To meet current financial obligations to creditors.
  • To reduce debt that cannot be paid off in the current month.
  • To eliminate debt within ___ months.
  • To maintain or upgrade their lifestyle.
  • To provide for their financial security, never being reliant on others.
  • To have an ongoing understanding of their net worth.
  • To budget what they have coming in and how they use it.
  • To minimize the amount of taxes they pay and pay those taxes on time.
  • To insure against serious financial loss due to medical bills and/or not being able to work.
  • To insure against serious financial loss from having to replace or repair damage to their home, other real estate, vehicles and other large tangible property investments.
  • To pay for the present education of adult family members and the future education of children and/or grandchildren.
  • To retire by the age ___.
  • To retire with at least ___% of their current level of income for at least ___ years.
  • To have a detailed plan of how and to whom their property, valuables and money will be distributed upon their death(s).
  • To have a charitable giving plan that is consistent with their values and compatible with the rest of their financial needs, goals and priorities.
  • To organize, coordinate and update all financial documents.

No advisor in their right mind would ever think that he or she could deliver all the above alone. Not to mention, delivering a customized version of the above to every family in their current book of business. Hardly! It takes a team. By the way, you might have noticed that this list is in language your clients understand, not in the technical terms you commonly use. Our research continues to tell us that your affluent clients want to be communicated to in a language they understand.

Not only is the above list quite long, it's incomplete; there is always more. Regardless, the idea is to be able to have someone sit down with each client and personally walk through the process. Your team of experts and service professionals then becomes an indispensable "partner" for each of your affluent families.

All of this takes time and effort. But done properly, this team approach will enable you to fully monetize the relationship with each of your families. This is truly a powerful "win-win." With a little fine-tuning, every team can do this. By expanding their wealth-management services, forming strategic alliances with the right experts and working to continually improve their service model, every advisor can do this as well. However, this requires an investment of time, energy and dollars into your business.

Hiring a flunky junior advisor because your manager is picking up part of the cost is a fool's mission. You never want anyone other than a first-class professional delivering any aspect of your wealth-management services to your affluent families. In fact, some of the best wealth-management practices only have one financial advisor. The other players are knowledge working support personnel.

I recognize this does not always fit the standard definition the industry has assigned to teams. But that shouldn't be your concern. Your concern must be continually enhancing your ability to attract, service and develop loyal affluent clients.

Using our broader definition of a wealth-management team, our 2007 research provides us statistically significant evidence that high-performance wealth-management teams are clearly superior in their efforts to attract, service and develop loyal affluent clients. However, our research also told us that only 17% of the teams surveyed were performing at this high level.

Yes, there is work to be done. Here is a quick way to start:

  • Analyze your affluent families; wealth-management services currently in use, level of personal service and potential to further monetize the relationship.
  • Assess your level of expertise: banking, taxes, investments, estate work, financial planning, insurance and the delivery of Ritz-Carlton service.
  • Determine the families that need expanded wealth-management services.
  • Determine the expertise you need to add and the professional you either want to form a strategic alliance with or join your team.

This is a good exercise to review on an annual basis. We are in a very fluid environment with changes happening much faster than any one person can keep up with. You never want to take your affluent families for granted.

If you would like a free overview of the wealth-management team stages of development from our 2007 High Performance Wealth Management Team research, go to Team Stages. Also, if you brought in 10 or more $1 million-plus clients over the past year and want to participate in one of our current research projects, visit 2007 Rainmaker Best Practices.

Once again, we want to thank all of you who have emailed comments and questions to us. We will continue to do our best to answer each one. If you have any topic or special requests, please contact Rich Santos, publisher of Registered Rep. and Trust & Estates magazines, at [email protected].

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