A Wealth Management Future?

In a discussion with Mark Tibergien this past summer, the conversation turned to people who not only clearly see the big picture now, but also can look ahead and see which firms will thrive in the future. Tibergien specifically mentioned independent broker/dealer Capital Analysts Inc. (CAI) and its long-time leader, Bob Cogan, as fitting the bill, particularly for his and the firm’s generally innovative approach. So when I heard that Matthew Lynch had been named in mid-October as president and CEO of the firm (Cogan, who had been president, becomes vice chairman as part of a planned succession), it spurred me to interview Lynch to find out more about what sets Capital Analysts apart.

Completing its 40th anniversary in the independent B/D space, and a subsidiary of Western & Southern Financial Group, CAI has more than 400 affiliated representatives, $8 billion in AUM, and had $80 million in 2007 revenues. Lynch acknowledges Capital Analysts’ “long, proud history” but argues that the firm’s culture has always embraced innovation. He notes that CAI came up with its own mutual fund rating system at the same time that Morningstar did, and that it early on embraced the notion of reps providing financial planning services and sophisticated investments to clients.

Why the evolution to wealth management? “What we did particularly well was to provide support for advisors who were active in providing affluent clients [with services] beyond traditional investment advice, to include advanced planning–estate planning and tax planning and, later, life planning–getting into intergenerational planning, family values transfer, ethical wills,” says Lynch. Considering how the markets have behaved of late, he says with a note of relief in his voice, “Thank goodness we’re in more areas than that right now.”

But is it possible to provide wealth management efficiently with many clients? “It is a challenge,” admits Lynch, but as with practice management in general, “a major part of that is effectively leveraging technology.” In his experience at CAI, and in previous stints with consultant Moss Adams and Lincoln Financial Advisors, Lynch found that “helping an advisor make those kinds of decisions and selecting the right tools” is essential, especially considering the dual challenges of regulatory demands and squeezed margins, and the “changing expectations on the part of the affluent client.” So advisors are turning to their partners “and saying ‘You’ve got to do more than just clear trades and custody assets, you’ve got to provide value.’”

For Capital Analysts, there are two interrelated ways it answers that call. First is “to make sure the advisor has access to the information they need, when they need it, to continue to be relevant to the client.” CAI reps get that through an advisor portal, using a seamless signon, that provides access to integrated data about the client and to information on the various services clients might need.