From the June 2007 issue of Investment Advisor • Subscribe!

Today's Wealth Manager

Unless you've been on a desert island for the past five years, you can't help but to notice all of the investment/financial advisors that are putting themselves or their firms out as "Wealth Management Professionals." Well, just like anyone can call themselves a "financial planner," any firm can represent themselves as being "wealth management" caliber. So how can you distinguish yourself among all the competition? If you want to set yourself apart from the rest of the financial planners out there, you can start by implementing advanced planning into your practice. It's a prudent approach, and responsible. How to do that?

First, take a look at the old-school way of traditional wealth management. This refers to the four basic objectives that most financial planners at wealth management firms implement at their practice:

  • Investor Profile/Introduction, where you get to know your client by gathering information
  • Risk, where you determine risk tolerance levels and appropriate investments
  • Implementation, where you choose the asset mix, pick the specific investments, and employ the plan

All four steps listed above are valuable tools required to establish an effective investment plan, but simply stated that's all the value they will provide. While many clients will be quite happy with this traditional wealth management approach, there are many other families that are seeking other elements to enhance their wealth management experience--estate planning analysis, tax planning, and various risk management techniques, to name a few.

Wealth management firms should ensure that their advisors take a look at the client's overall financial picture. The planner must be careful to only make recommendations and implementations in areas of their expertise, but also make time to review wills, trusts, tax returns, current loans and other debt, life insurance, long-term care, disability, and P&C insurance, bank accounts, and future education expenses for children or grandchildren.

I'm not saying that you need to become an expert in all these areas, just be able to recognize weaknesses in a client's current situation. You can make recommendations to correct some shortfalls, but more importantly introduce your clients to other professionals that can help fill these voids (make sure that you're not using other professionals that will compete in your area of expertise).

While you're uncovering these "missing links" you'll also need to develop relationships with other professionals in your city to build your centers of influence. As you discover legal and tax preparation needs you'll want to have lawyers and CPAs available to work with your clientele. Take it upon yourself to initiate the introduction of the other professionals to your clients on your own turf. It may be necessary for your clients to make office appointments with the CPA or lawyer at a later date--don't be alarmed, this is all part of building the relationship with both your client and the legal/tax professional. As you continue to refer business to these professionals, they will also uncover similar needs with their clients and potentially refer some of their clients to you for areas of your expertise. Using advanced planning in your wealth management practice will help improve your client retention, increase the capabilities of your practice, generate more business, and improve the client trust in your firm.

Steven T. Merkel, CFP, ChFC

Financial Advisory Consultants, LLC

Naples, Florida

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