“I only have one rule about wealth managers,” Mark Tibergien likes to quip, “they must have wealthy clients.” If the current managing director of Pershing Advisor Solutions and former Moss Adams practice management guru has difficulty defining such a key segment of today’s advisory universe, what hope is there for we mortals? The slipperiness of the term wealth management, and what it includes, or should include, also presents an opportunity for advisors who want to go into that space, however. In conversations with industry experts, with wealth managers themselves, and with the people who would like wealth managers to partner with them, a clearer focus emerges. While a wealth manager might have an investing background, or hold an insurance license, or have a JD after her name, that is not the primary service that she offers her high-net-worth clients. Every wealth manager must have more than a passing acquaintance with the latest tax legislation and the most recent court rulings on trusts. Every wealth manager must be able to understand how a distressed debt single strategy hedge fund operates, if only to explain to an inquiring client why it might not make sense for said client to invest in said hedge fund, despite the scuttlebutt he’s heard around the country club watering hole.
True wealth managers constitute maybe 3% to 5% of the entire advisor universe, estimates Susan Hirshman, Investment Advisor’s “Wealth Advisor” columnist, who in addition to a long career plumbing the advisor universe at places like KPMG and JPMorgan and holds CFP, CPA, CFA, and CLU credentials. “They cross the T’s and dot the I’s,” of the work of other advisors like the client’s trust lawyer and accountant. “They’re involved in the personal, business, family life” of their clients. They can only afford to have relatively few clients, and “are not fixated on the numbers, but more on the solution,” Hirshman says. Summing up, Hirshman describes wealth managers as being different than the standard advisor because they make clients “aware of problems they didn’t know they had, and then provide the solutions.”
One company that knows how to provide solutions appears to be Raymond James Financial Services through its Wealth Solutions Group. Patrick O’Connor, a CFA and VP for the group, notes that wealth management is a “tremendously competitive space,” but that it’s more of a positioning and marketing issue,” than one revolving around specific products or services. Any of the independent reps of Raymond James can use the services of the Wealth Solutions Group, which acts as a sounding board for the advisor with high-net-worth clients, or as a second opinion for the advisor, says O’Connor. The Group will help prepare marketing materials for the advisor to send to clients, and will host a conference call between the advisor and the client with the appropriate experts–tax, legal, investing, risk management–from the Group. Moreover, if a client (or prospect) has $1.5 million in assets, the Group will invite the client and advisor to Raymond James’s headquarters in St. Petersburg, Florida, for what they call a BIO (By Invitation Only) meeting at which they’ll deliver the proposed plan to the client. O’Connor says it’s not uncommon for Raymond James Financial Chairman Tom James to stop into those meetings as well. The close rate on those BIO meetings? About 85%, says O’Connor, measured by by either becoming a client or bringing additional assets to the advisor relationship.
There’s another benefit to these BIO meetings, O’Connor notes: it helps big time with recruiting new advisors to Raymond James. There’s still another advisor-centric advantage to the RJ approach. Music to your ears? Check out the similar kinds of services and products provided by the prospective partners on the next two pages.