The term “wealth management” has been used since the early 1990s to describe, in the U.S. at least, a more holistic, comprehensive advice model, similar to financial planning. But United Capital and its CEO Joe Duran believe the term has been overused, bastardized and sapped of meaning as wirehouses and other large institutions call their brokers and advisors “wealth managers.”
So United Capital will change its proper name from “United Capital Private Wealth Counseling” to "United Capital Financial Life Management" and hopes the phrase "finanical life management" becomes a term d'arte in the industry, replacing wealth management as the dominant way independent advisors describe what they do.
Duran said the firm will embark on a multi-million-dollar rebranding of all the firm’s offices and communications, pushing the idea out to consumers and advisors. The firm will also share research they did with Riedel Strategy which shows consumers think the term "wealth management" is too narrow to describe how they think about their financial lives.
“We’ve got to figure out how to create a category that more aptly describes what we do and what most independent small financial planners are doing, because while we all think wealth management is what we do, the clients really don’t,’” Duran said.
United Capital defines financial life management as the intersection of a person’s life and finances. In other words, it’s helping a person live a better life and understand the entirety of their life, not just their investments. The consumer research they completed, Duran said, supports the notion that clients consider the quality of their lives more important than making sure their money is being managed properly.
“What we’re thinking about as a company is that we’ve got to figure out how to make sure that money serves people’s life purpose rather than their life serving money,” Duran said. “And that’s the big idea around financial life management—that money is here to serve you; you shouldn’t be serving money.”
The firm claims no legal right to use the term exclusively, Duran said. “In order for it to really be a thing and really define something, we needed to be broad and all-encompassing and have it be open,” Duran said.
The initiative started about a year ago, when Lazard, the investment bank, sent Duran the firm’s latest valuation report. Duran saw that Lazard's bankers were using multiples of publically traded companies that they considered most appropriate for what United Capital does, but it was a grab bag of companies, including Envestnet and Financial Engines, SEI, LPL Financial, Ameriprise and Morgan Stanley.
“I came back to our team here, about a year ago, and I said, ‘It’s very concerning to me the fact that people think of wealth management and really don’t know the difference between us and a brokerage firm that is simply in the business of selling products,’” Duran said. “‘If this is how the institutions view the world, I can’t imagine that the end clients think that differently.’”
Duran enlisted Riedel to conduct research on how consumers defined wealth management. The firm interviewed 200 individual families, which felt wealth management was essentially any issue that concerned money.
“Individuals thought wealth management was everything from an insurance guy to their accountant to a broker to a banker,” Duran said.
The firm then went to 30 couples, age 45 to 65 years old, and asked them to describe their financial life story. They found that only 10 percent of those stories were about investing and saving, while 90 percent were about working and spending.
The researchers also found that people tended to remember the tradeoffs they made, like sacrificing an expensive vacation for a few years to pay for a kids' college education.
“Your ideal life and investment and money world are often in conflict, and the things you remember are whether you do the things that give you the life you want or do the things that give you more money,” he said. Putting a label on that experience is what Duran hopes to accomplish with the term "financial life management."
“We think that this will be a category that 10 years from now will be as important and separate as ‘wealth management’ was 10 years ago,” Duran said.