From the June 2007 issue of Investment Advisor • Subscribe!

Outside Help

When you need it, don't hesitate to call on additional expertise

Last month, we looked at how three advisors went outside of their practices to create an ad hoc network to solve the unique advanced planning concerns of their high-net-worth clients. Advanced planning requires a very different approach than traditional one-advisor-to-one-client interaction; instead you act as a project manager on behalf of your client, leveraging an entire team to solve complex challenges (such as funding an estate plan with a customized financial product) or accomplish unique goals (such as providing insurance for a high-risk client). Rather than simply passing off the client to an attorney or CPA by providing a referral, each advisor acted as an overall project coordinator, addressing these non-traditional needs of their top clients by interfacing with a group of professionals who specialize in those needs.

To become their top clients' "problem-solver," those advisors created their own homegrown networks. For advisors that choose not to build their own network of advanced planning specialists (perhaps they are focused on providing their primary service, such as asset management, or don't have enough clients to justify the time and effort required to build a network from scratch) there's an alternative approach. For cases that call for such complex solutions and require expertise in the needs of the high net worth, a private wealth specialist may be the solution. Acting as an advisor to advisors, a private wealth specialist works closely with you and your high-net-worth and ultra-high-net-worth clientele on advanced investing, estate planning, taxation, insurance, and business-ownership issues, among others. The private wealth specialist already has a network of professionals who are top specialists in these and other more far-flung fields beyond typical planning issues, such as valuing period artwork, resolving intricate foreign taxation issues, or creating private foundations.

The client remains yours. The private wealth specialist takes the role that you, the client, and he decide. He can simply support your efforts, but more often this specialist takes a lead position as facilitator to coordinate the work of all the experts on the team.

One HNW Service Model

"We position ourselves with this notion that if there's anything that can possibly touch your financial life, we've got a resource or capability or a person to take care of it. That's our philosophy," says Erik Dahlquist of the Dahlquist Group at UBS in New York. "We need to build out a platform that enables us to never be in a situation where the client sensed they could outgrow us."

Since he started at Dean Witter 12 years ago, Dahlquist has evolved his business model away from a classic transactional one and towards a more holistic planning solution. He also wanted a very consistent and systematic experience for his clients that would reveal their entire financial life and needs. To support this process, he built an eight-person group of advisors and support staff that concentrates on client service and data management. At the center of his team is an operating officer who allows Dahlquist to be more client-focused and thus more productive. As his business and client base grows, he wants to become more sophisticated about group and resource management. As part of this effort, Dahlquist uses a three-level system to match his clients' concerns with the right kind of expertise:

- Advisors in his group;

- UBS resources and experts;

- A private wealth specialist.

For his first level of clients, those with up to $10 million in AUM, Dahlquist finds that certain planning challenges come up consistently, so he's invested in developing these competencies within his group, sometimes in conjunction with other USB resources. "If someone on the team isn't capable or doesn't have the knowledge, we know the resources within the firm and leverage those," notes Dahlquist. For example, an executive in his 50s with a few million dollars tucked away in savings who's thinking about retiring commonly needs asset and income management, and basic estate planning services, he observes, so Dahlquist would initially turn to UBS resources for help with these cases. "These clients tend to...need somebody who's going to organize their financial life for them and who's a trusted partner," he says.

However, when the challenge a client brings him includes specialties that he can't find in-house or within UBS, he works with an external private wealth specialist. His clients, which include corporate executives up to the chairperson and board member level, tend to have highly concentrated stock positions and more complex planning needs than other executives. They may have multiple real estate holdings, for example, or real estate in different countries, and taxation issues.

The Private Wealth Specialist

When he needs a private wealth specialist, Dahlquist calls Arthur Bavelas, president and CEO of Resource Network LTD in Radnor, Pennsylvania (and a principal of Advanced Planning Group, a private wealth specialist firm where I, too, am a principal). In addition to having access to a range of experts, Bavelas views his primary function as a facilitator and coordinator of the team of professionals selected from his network to solve a client's financial concerns. The team members change depending on the client situation.

At the start of a project brought to him by Dahlquist or another advisor, Bavelas addresses three questions so the group can work productively: what does the client need to accomplish; which of his network of specialists is going to tackle each aspect of the case; and what is the time frame for providing a solution that will meet the client's needs? Bavelas sets the program into action based on the responses to these questions. He says that the first inclination of many high-net-worth and ultra-high-net-worth clients is to turn to their personal lawyer and accountant to address these complex challenges. Unfortunately, based on his experience, these efforts slow down the process, or often cause it to fall several steps short of completion. Since Bavelas and his network have worked on hundreds of cases, they know the roadblocks to implementation--including those created by the client as well as a myriad of technical challenges--and can avoid them, while also compressing the time it takes to reach completion. The longer plans and documents linger without moving on to the next stage, Bavelas says, the more likely clients will lose interest.

Thinking First of You

You can make a client think of you as a problem-solver by constantly demonstrating ways that you add value. For larger clients, Dahlquist will tap extra resources that can improve a client's perception of his practice and the range of services the group is capable of providing. For example, even if an initial review of a client's situation identifies some basic planning issues, Dahlquist will go to a specialist he's used in the past and ask him to look at the situation and identify any other exposure or liabilities or anything else the client should know.

"The client looks to us as someone that's going to think of those kinds of solutions, and that's going to be one of our differentiators," he argues. "For example, we have external relationships with groups that specialize in personal property and casualty insurance. We look at the client's exposure and liabilities like we would look at a corporation."

The Team Approach

While the strength of your relationship with a client is the basis for your work together, advisors and private wealth specialists who work with this level of clients always speak of the need for flawless execution on service-related matters. Their perception of you as a leader of a group of experts, as opposed to a solo practitioner, is an important component to reassuring them on this perception. Especially with more affluent clients, they value the notion that a team is working on their behalf. It helps engender greater confidence that their needs will be addressed thoroughly.

In his early conversations with a client, Dahlquist makes sure they agree on the unique needs the group must address, the special service requirements and who on the team will provide them, the preferred form of communication, and the financial concerns they'll work on together. "If we do that well," he says. "I think that's a plus for us, and they know what to expect when they're working with us."

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