From the August 2006 issue of Investment Advisor • Subscribe!

Lessons From the Best

How successful wealth managers got that way

In today's competitive environment, it is critical to benchmark yourself against the opposition. Is your behavior in line with some of the most successful practices? In a JPMorgan-conducted study of 300 advisors with average assets under management of more than $250 million, we found four common behaviors that are critical to success. These top advisors:

  • Take an integrated approach to meet their clients' financial needs
  • Develop deep and personal client relationships through a client segmentation system
  • Have consistent and meaningful client contact
  • Implement a proactive system for receiving referrals

According to the JPMorgan survey, 86% of top advisors integrate a variety of solutions for their clients as part of a comprehensive, holistic approach. They want their clients to see them as solution providers, not simply product implementers.

Top advisors can articulate a variety of wealth management solutions in each of these areas: wealth enhancement, wealth transfer, asset protection, and charitable planning. Furthermore, they develop strong networks--internally and externally--to leverage the expertise of other professionals, so they can further counsel their clients and be the center of their clients' integrated financial planning needs. By definition, wealth managers have to be experts at what they do. Clients want to learn from, as well as do business with, experts.

You may wonder if it's possible to be a true expert in all the wealth management issues that your clients face. The answer is, most likely, no. What you can do is identify issues, discuss possible solutions at a high level, and, most importantly, know when to add other experts to your team.

Building a team has become a necessity as client needs have become more complex. The financial services industry has become more complicated and moves too quickly for any one person to master all of the tasks and issues necessary to grow and maintain a successful wealth management practice.

To form your team, think about what resources are needed, your strengths and weaknesses, your clients' personalities, and who would work well with them.

Client Segmentation

Top wealth managers must connect with their clients beyond establishing an investment strategy or executing a financial plan. According to research by Spectrem, clients want a relationship with an advisor who understands them and cares about their financial goals and personal preferences. To progress toward this knowledge, start by segmenting your clients.

According to the JPMorgan survey, more than half of top advisors segment their clients into groups with similar characteristics. Of those advisors, 47% segment clients by values, behaviors, aspirations, and communication styles.

It is not enough to segment clients by amount of assets or products used but according to psychographics as well (see June and July columns, on "passion points").

Always keep in mind that clients are not looking to purchase products, but rather, what the product reflects. Are clients looking to purchase performance, or something more emotional--such as security, or financial independence--and the freedom to do what they want, whenever they choose?

Keep in Touch

Top advisors maintain strong relationships through clear communication and consistent contact. An advisor should know how each client communicates and processes information. In our survey, 67% of top advisors said that they conduct in-person meetings. In preparing for these meetings, they consider the approaches that will result in positive client behavior.

To get started, develop a customized communications plan for each of your top clients. Some advisors confuse reporting information with communication, but communication is the clear exchange of ideas. When the advisor is the only one talking, where is the exchange? (For some specific tips on how to communicate, see the Communications Rules sidebar.)

Proactive referral system

To continue the stream of referrals, top advisors in the JPMorgan survey--86% of whom ranked existing clients as an important source of new business--have a proactive system for getting new business referrals that is tied to their business plans.

Top advisors use different techniques for different clients. Clients involved in their communities are expert networkers and excellent sources of new prospects.

Another untapped networking resource is in your own neighborhood--local groups, organizations, and associations. Contact the meeting coordinator of your local Chamber of Commerce or Rotary Club. These organizations are always looking for new topics and speakers. You don't need to join; just volunteer to make a presentation. Your presentation could include valuable tips or real-life stories as to how you helped clients further their financial independence. Your expertise will be welcome to most groups, just remember to keep the speech informative, concise, entertaining and then, most importantly, follow up with potential targets. Your presentation will position you as an expert, validating your credibility and increasing the visibility of your practice.

Unfortunately, there are many advisors who find networking frustrating. They spend too much unproductive time in their attempts to network and have little to show for their effort. What we have found is that people confuse the purpose of networking. It is not about showcasing your knowledge and credentials. The purpose is to gain an understanding of potential clients' concerns. To successfully network, take the time to listen rather than sell. Prompt your potential new client with questions that will lead to better understanding of their wants and needs.

Top advisors know that to remain competitive they must continue to change with the times and always look to improve their services. To reach that "top" status, ask yourself whether you've grown complacent. This question is so important because while it is not always easy to improve on mediocrity, there is always a chance that a great person can become average when he also becomes complacent.

As well-known motivational speaker Nido Qubein notes, "Knowledge is like food in your fridge. It doesn't give you nourishment until you cook it, eat it, digest it. Only when it's in your bloodstream does it do you any good. Knowledge is only good when it's in your psyche."

Through self-knowledge, and knowledge of clients, advisors can move from 'average' to 'great.' Your clients demand excellence in all you do and will label you by the value rendered to them. Your value is leveraging your expertise to further assist your clients so you can become their primary advisor.

With a targeted client plan consisting of an integrated approach for client segmentation, actively pursuing referrals, and furthering meaningful client contact, you will be on your way to meeting your clients' financial needs. These proven "top advisor" behaviors can position you as your clients' primary advisor, resulting in more personal client relationships and a consistent stream of new business.

Susan L. Hirshman, CFP, CPA, CFA, CLU, is a managing director for JPMorgan Asset Management in New York. In that position, she develops strategies to provide wealth solutions to the affluent market. She can be reached at susan.l.hirshman@jpmorgan.com.

Reprints Discuss this story
This is where the comments go.