From the July 2007 issue of Boomer Market Advisor • Subscribe!

Become the center of your boomer client's wealth management team

As boomer investors enter retirement, a tangible shift is occurring in their approach to asset management. They want to make money, protect what they have, minimize taxes and safely pass their wealth to their children. They seek advice, not only about investments, but also tax planning, credit management, insurance and estate planning.

But advisors have been slow to address new boomer investing preferences. In fact, recent studies indicate there is a good deal of dissatisfaction among investors with the services they receive. Prince & Associates reports that nearly 87 percent of participants that received a proposal from an investment advisor said the advisor "did not understand them." Roughly the same percentage said they felt the advisor's recommendations were wrong.

This high level of dissatisfaction among clients indicates that the generalist approach to financial planning is inadequate. To address the complex needs of today's sophisticated boomers, advisors should consider a comprehensive wealth management approach.

Wealth managers take a holistic view by addressing a client's complete financial situation and then implementing a broad range of products, services and solutions. Furthermore, wealth management is not about selling products. Rather, it's a client-centric philosophy that requires the advisor to truly understand the breadth of a client's needs, and craft personalized solutions based on those needs.

A byproduct of delivering integrated solutions to complex financial problems is deeper client relationships. In turn, clients tend to be more satisfied with the relationship, assigning greater value and a higher level of trust to the advisor.

Build the support team -- The first step in building the support team is identifying core competencies, as well as areas where the advisor might lack expertise, such as in tax planning, estate planning, insurance, legal issues and credit management. Once identified, the advisor can begin to develop strategic alliances.

As an example, advisors might consider partnering with CPAs to address the tax implications of complex investing strategies. One method to identify potential CPA partners is to ask top clients for the name of their accountant. Having a shared client is usually enough to get a return phone call. The advisor should make an introduction and suggest they meet to discuss ways they benefit from a shared client.

Estate attorneys are critical to a wealth management team. The attorney might be willing to conduct joint estate planning seminars for your clients and prospects, which will assist in lead generation. More importantly, estate planning attorneys are often asked to assume fiduciary responsibility for the client. The 1990 Prudent Investor Act put more focus on the tenets of modern portfolio theory and the need for a formalized process (including an investment policy statement and a rebalancing strategy). The attorney might decide he doesn't want the liability associated with investment planning and will delegate that responsibility to the advisor.

Control the process -- As the center of the wealth management team, the advisor should facilitate every step of the process. He should resist the temptation to hand off clients to partners. His job is to monitor every phase of the client relationship, ensuring it's on track and moving forward. A communication hierarchy should be established so the client has a handle on the process and understands the reason a certain specialist is called upon. Likewise, specialists should understand their roles and not make recommendations without first discussing them with the advisor. There should be a clear delineation of each team member's role and a willingness on the part of specialists to be individual contributors, restricted to their areas of expertise.

Advisors should include CPAs in client reviews and keep them up to speed on new investment decisions. The advisor can also recommend that the client grant the CPA permission to access online investment accounts, which are helpful during tax season. In each case, the advisor controls the interaction, which creates a formalized communication process that keeps the advisor at the center of the wealth management team.

Make the move -- The transition from investment generalist to a multidimensional wealth manager takes time -- usually about 18 months. However, by identifying the partners who can make a real contribution and establishing an effective communication process within the group, a high level of trust among clients can be built, which provides the comprehensive services that boomers require.

As boomer clients enter retirement, their needs become increasingly complex, and it's critical to offer a broad range of solutions, forge deeper relationships and adopt a personalized financial planning approach. The wealth management philosophy addresses these issues. It's time to take a closer look at implementing this strategy.

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