“Innovation drives profits,” Steve Forbes told the attendees of the Raymond James Financial Services annual conference in mid-March, citing as one example the phenomenally popular iPod. “But now everybody’s catching up to Apple,” he said. That innovation competition will lead to more innovation on Apple’s part to remain profitable and stay competitive. Like the broken clock that’s right at least twice a day, Mr. Forbes was spot on in this instance. Innovation also provides that lifeblood of business–differentiation which is becoming harder and harder to achieve in all walks of life and business.
That made me think of wealth management, formerly the province of big private banks and trust companies, these days it seems to be a core competency of every financial services company big or small, if you believe their marketing materials. The banks might have originated the idea, but just as they’ve figured out how to provide objective investment advice to clients, and get compensated for it, independent advisors and their partners are coming up with all sorts of innovative ways to efficiently deliver actual wealth management services to their high-net-worth clients. This month’s special report that begins with our cover story by Kate McBride and Savita Iyer-Ahrestani on page 46 (divulging the winners of the fourth annual Separately Managed Account Managers of the Year) foregrounds some of the products and services that are appropriate for HNW clients, like separate accounts–it still takes a pretty high minimum to get to the best money managers. Then advisor Mike Patton reports on a tax-savings technique appropriate for some HNW property-owning clients (page 78). There’s also a profile (page 64) by Managing Editor Bob Keane of a wealth manager who went from chemistry to finance, and a rather interesting study by our Affluentialist columnist Lewis Schiff (page 58) on the traits common to a certain kind of high-net-worth person called the Middle Class Millionaire advisor. Susan Bradley of Sudden Money Institute fame proposes (page 72) a way for all the advisors of a high-net-worth client not just to get along, but to collaborate for the greater good of said client. Finally, we present a list of potential partners to get you started, or to help you improve, on your wealth management offerings. As an independent, you can’t do it alone, but you can do it in a way that showcases your independence and objectivity while differentiating yourself from the captive folks.
One of my favorite examples of an innovator is Greg Friedman, who not only founded his own financial planning firm in Novato, California–Friedman and Associates–but also, with Ken Golding, devised the popular advisorcentric CRM software called Junxure. Friedman’s firm won the Schwab Institutional Best-in-Tech award last fall, but his story is a classic tale of a business person who wanted to build a tool that didn’t exist yet but that would make his business more efficient. He is rolling out a new version of the software, and in two separate telephone interviews and WebEx demos recently he showed and told me what made this version of the software the best yet. For one thing, when my Macintosh gave me an error message that kept the demo from happening, he blurted out “awesome!” because it was something he hadn’t expected and, frankly, I think he loves overcoming obstacles. That’s a trait common to the independent advisor, in my experience, and should prove helpful in competing against those bigger firms that have made wealth management their middle names.