Attend any industry conference or chat with colleagues or consultants, and you’ll hear the buzzword du jour: wealth management. Many advisors are attempting to provide wealth management services, but their first hurdle is deciphering what the term means.
To help its affiliated advisors morph into wealth managers, Securities America recently launched a wealth management division and defined wealth management for its advisors. “We defined it as providing comprehensive financial services in a collaborative manner to clients with investable assets of [at least] $1 million,” says Paul Lofties, director of wealth management at Securities America. Wealth management goes beyond offering investment services and financial planning to clients, he says, because the advisor’s goal is to become “the general manager” of all of their clients’ wealth related issues–for instance, business succession planning, estate planning, charitable planning, education planning, banking, and mortgages.
When the advisor lacks expertise in any of these areas, she should willingly collaborate with other professionals like lawyers, accountants, and such to provide the services, Lofties says. Earlier this year, Securities America linked with Web-based EverBank’s (www.everbank.com) advisor program so that its affiliated advisors could offer their clients EverBank’s banking and mortgage services. EverBank is “one of our strategic partners to help provide solutions on debt management, mortgages, and banking products,” Lofties says. As of the end of October, 184 affiliated advisors have signed up to use EverBank’s mortgage services, and 250 of them are now offering EverBank’s bank services to clients. Dennis King, VP of Securities America, says advisors are excited about “the ability to not only refer their clients to a mortgage broker as an additional service, but also to be able to be compensated for the mortgages.” Depending on the size of the mortgage, advisors’ average compensation is approximately 40 basis points, he says. (As we’ll see later, EverBank’s advisor program has seen impressive growth since its launch only two years ago.)
Lofties says because two of the biggest challenges advisors face are finding high-net-worth clients and then “changing their behavior to work with them as a wealth manager,” Securities America has partnered with John Bowen’s firm CEG Worldwide to provide the B/D’s top 250 reps with a wealth management coaching program. “The top 15% of our rep force will go through our [coaching] program,” he says. In looking at other broker/dealers’ wealth management offerings, Lofties says “a lot of other firms have rolled out technology and some resources, but they still don’t seem to be getting the traction that they want in their wealth management offering” because they’ve failed to teach advisors how to be wealth managers.
Securities America is also developing aggregation technology to allow its advisors to see all their clients’ accounts held at the B/D and outside accounts. Plus, to help advisors address clients’ business succession and charitable planning needs, Securities America has partnered with the Family Business Resource Center (www.seekingsuccession.com) in Clive, Iowa, which specializes in business succession.
Lofties says he’s noticed that other B/Ds tend to bring on home office staff that are “generalists” to help advisors tackle these issues. By contrast, Securities America is aligning with third parties that are experts in these areas so they can act as “virtual partners,” he says. “These virtual partners are responsible for education and training at our conferences, and they have additional certification programs that our advisors can go through if they want to beef up their education level” in areas like business succession.
Before launching its wealth management division, Securities America rolled out an income distribution program through an alliance with Wealth2K, Inc. (www.wealth2k.com), to offer the marketing firm’s Income for Life Model to its affiliated advisors. Lofties says Income for Life is especially helpful for advisors’ boomer clients because it provides advisors with a “proposal system that outlines how to structure a portfolio” for boomers, and provides recommendations on investment products to address the changes that need to occur in boomers’ retirement portfolios now that they’re going from accumulation to distribution of assets. Boomers “need to become concerned about reliability of income, not return on investment,” he says.
It’s About Time
So why has wealth management hit such a fever pitch? Simple: The baby boom generation, a huge demographic, is nearing retirement, which means hordes of assets will be up for grabs. Also, wealthy clients nowadays are desperate for a wealth manager to help them wade through the endless number of choices they have on ways to best manage their money. Advisors must compete with the likes of Merrill Lynch, which provides these holistic wealth management services to retail clients through its Total Merrill solution. Kevin O’Hanlon, executive VP of the EverBank Advisor Services Group, says EverBank’s banking and mortgage solutions provide advisors with two crucial parts of a wealth management platform.