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Banking on Wealth Management

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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 ( 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 ( 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. (, 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.

Advisors seem to agree with O’Hanlon’s assertion. Only two years after starting its advisor program, EverBank now has $250 million in deposits, which O’Hanlon says represents 110% growth just from last year. The online bank has also done $250 million in mortgage originations, including home equity lines of credit, over the last two years.

EverBank has signed up a number of broker/dealer firms as clients, and the B/Ds help EverBank promote its products to their affiliated advisors. All told, a whopping 17,500 advisors have access to EverBank’s banking and mortgage services through their affiliated broker/dealers. “We have a sales force in the field that actually calls on the reps of the B/Ds and introduces the products and shows them how to introduce the products to their clients,” O’Hanlon says. While EverBank is “continually signing up new advisors,” he says, as of now, 1,600 advisors are using the online bank’s mortgage services and 2,200 of them have signed on to offer the banking products. “Mortgages are a bit longer acquisition phase for advisors because they’ve always worked on the asset side, not the liability side,” O’Hanlon says. “But the advisors that are using the mortgage products are using them extensively because they understand the power of having that conversation with the client and going through the mortgage application.” Because the application requires the client to divulge so much about his financial status, “the advisor now has a much clearer picture of the client’s entire financial situation,” he says. So the advisor can “then have a more meaningful conversation with the client and expand that relationship.”

Having banking and mortgages in their arsenal of services is both an offensive and defensive strategy for advisors, O’Hanlon says. Offensively, offering these services “broadens the relationship they have with clients, and cements the client relationship,” he says. “Defensively, by not having other financial services firms in that relationship, it prevents the backward integration of those firms into the client relationship.” In other words, if a client takes out a mortgage at a local bank instead of through the advisor, the bank is naturally going to go after the client’s assets as well. Another plus is that clients of all wealth levels are seeking banking and mortgage services–from the mass affluent to the high net worth.

Compensation to the Rep

King of Securities America says the brokerage firm performed extensive due diligence on other companies that are offering mortgage services, but the B/D chose EverBank because “it has the best offering,” he says. EverBank has a patented system that is compliant with the Real Estate Settlement Procedures Act (RESPA), and the system also tracks the entire mortgage process to ensure the advisor has accomplished all of the steps needed in order for him to be compensated for originating a mortgage. Unlike EverBank, “a lot of these companies are offering incentives to the B/D to get reps signed up, but they’re not offering compensation to the advisor,” King says.

Lenny Lloyd, an advisor with Davenport, Lloyd & Figari Investment Management Inc. in Stuart, Florida, started using EverBank’s services about nine months ago when his B/D, Investors Capital in Boston, signed on with the online bank. He says EverBank provides some of the best interest rates out there. For instance, he says, EverBank offers a free checking account with an introductory rate of 4.5% on the first $100,000 [deposit] for three months. “Anything over that [$100,000] they’re paying 3.4%, which is one of the best rates.” Plus, he says, EverBank guarantees to be within the top 5% of interest rates. Perhaps best of all is the fact that by advertising EverBank’s rates, Lloyd’s planning firm has attracted many new clients. “People are coming in with their safe money” to stash in EverBank’s high-yielding products, he says. Advertising EverBank’s rates has turned out to be a “great way to meet more people in the community,” and turn them into prospective clients.

EverBank’s O’Hanlon says the bank offers a broad array of “unique” products like its World Currency CD, Basket Currency CD, Goldlink CD, and “if you don’t want to have one specific currency,” the BasketLink CD. The newest additions include the DollarBull, Asian Advantage, and MarketSafe certificates of deposit. The DollarBull CD allows investors to benefit because it increases in value along with the U.S. dollar, while the Asian Advantage CD allows investors to invest in a strategic mix of the region’s currency like the Japanese yen, the Thai baht, and the Singapore dollar and New Zealand dollars. “There are a lot of people who want to have currency as an asset class and diversification strategy,” he says.

The oldest baby boomers hit 60 next year, so now is as good a time as any to assess whether you’re truly providing the wealth management services that your existing clients, and prospective ones, need. Help from a broker/dealer, consultant, or a colleague is well within your reach.

Washington Bureau Chief Melanie Waddell can be reached at [email protected]