The financial services industry is out of step with the public in promising to make people rich — when their real goal is to have rich lives.
To that end, the so-called “wealth management” profession — generally the preferred term of financial advisors — has passed its sell-by date.
That message comes from no less than the, er, erstwhile wealth managers of United Capital, a pace-setting firm that is now re-branding itself as a “financial life management” firm.
“Our goal is to become the largest financial life management platform in the country,” United Capital’s CEO Joe Duran tells our sister site, ThinkAdvisor, in a phone interview. “We want to be the first billion-dollar brand in financial life management.”
That is an ambitious goal for the now-$13 billion firm (measured in assets under management).
But Duran is no stranger to large achievements, having founded United Capital, a national network of independent advisory firms, 10 years ago — after building and then selling money management firm Centurion Capital to GE Capital at the ripe age of 34.
To achieve its goal, Duran has rolled out materials to United Capital’s nearly 60 constituent firms, and has initiated a new video campaign to the public to help it understand how advisors can help their clients make better financial life choices.
The catchy tune with the “It’s not about the money” refrain shows colorful images portraying what “it” is all about: making tough life choices with financial implications.
Those crossroad decisions include whether to earn more money or spend more time with family; whether parents should pay for their children’s college education or encourage them to make their own way; whether people spend now or save for a rainy day.
“The way you spend, the choices you make — those are ideas I don’t see in advertising, or more importantly in the service offerings [our industry] gives,” says Duran.
The “tough choices” rubric has long been the prism through which United Capital has presented its own advice offering; what’s new for the Newport Beach, Calif.-headquartered firm, with $130 million in annual revenue, is the name they’re giving it.
“We used to call it wealth management like everyone else…but nobody understands what that means anymore,” says Duran. “Everybody calls themselves wealth managers in our industry.”
The new nomenclature is the result of a lengthy two-part research effort United Capital began in June of last year.
First, it hired Chicago-based McGuffin Creative Group to explore how consumers perceive the financial services industry, by getting the public’s honest reactions to stereotypical images companies use such as the couple walking on the beach or strolling in a vineyard.
“At the end, what we heard loud and clear is that almost all clients want one thing from their advisor: the truth! That, 'hey, you’re gonna have to make some tough choices!’”
In phase two, United Capital turned to Newport Beach-based behavioral market research firm Riedel Strategy to flesh out the “texture,” as Duran puts it, of what that truth is.
The firm’s chief research strategist Barnaby Riedel conducted qualitative research with hundreds of couples, many of them lasting one or two hours, according to a report about the research in Friday’s New York Times.
“We asked respondents to think of their financial life as a story and to break that story up into chapters, each comprised of a high point, a low point and a turning point,” Riedel says. “Our goal in leading them through this open-ended exercise was to study how they organized a financial life and made it meaningful."
Duran says the research brought four key findings to the fore:
“First, that a financial life is not about money,” the United Capital CEO says. “It’s about one’s entire life; all our industry talks about…is money.
“Second,” he continues, “is that every major turning point is about having to make a trade-off. The thing that people remembered was that life was a choice; they couldn’t have it all.” So, for example, families faced the choice of whether to continue living in expensive New York City or live elsewhere but put their kids in private school.
“Third: Over 90 percent of observations were about working and spending; nobody in our industry talks about spending wisely, only about investing wisely,” Duran says.
And the fourth point, says Duran, is that the content of those chapters — the part survey participants most remembered, were the turning points — becoming independent, starting a family, starting a company, etc.
So how do United Capital advisors help clients through financial life management?
Duran says the first step is knowing each person’s personal biases. “Everyone has one and it affects their judgment,” he says. For example, some investors are primarily driven by fear they will outlive their savings; others are driven by acquisitiveness.
The next step is discovering what really matters to the client — “not vague goals but what are your priorities when you have to make choices?” Duran says.
Finally, United Capital advisors use a framework designed to “help people maximize their lives,” Duran says. This is done through regular, real-time feedback.
So, for example, if Duran defines a happy life as spending quality time with his wife, then when his advisor checks in after six months and his wife rates their marital happiness a 6 out of 10, he is getting instant and meaningful feedback about whether to take more time off for family or spend more time on the road.
“That leads to a set of choices today that have nothing to do with investing; it’s really about how money is going to support my life,” he says.
That, in essence, is financial life management. Duran offers a counter-example, though, to sharpen the point, telling of a man he knows of in his late 70s with $10 million, who has had multiple failed marriages and was not speaking to his children.
“The overarching lesson of his life,” Duran sums the matter:
“Had he only realized how little the money would have mattered once he had it, he would have made completely different life choices.
“The sooner we are here to help you make the right choices, to help you do the things that really matter, the better off we’re all going to be,” he says.
For now, the CEO expresses the hope that the financial life management concept takes root in the industry and grows — well beyond the United Capital advisor network.
“We didn’t trademark the name [i.e., financial life management],” Duran says. “We think it’s a category. We’re among the largest firms doing it, but there are lots of good independent firms who do what we do.”
The trademark rhetoric is not bluster. The firm’s got lots of service marks — for its “money mind,” “honest conversations,” and “financial control scorecard” advisory processes.
The United Capital CEO knows his firm is not a Merrill Lynch, but feels its scale and growth trajectory are sufficient to impact the industry.
“We are very big relative to any independent advisory firms — we don’t have a lot of peers,” he says. “We’re large enough to make difference, large enough to have a voice and be heard.”