Embracing two routes to growth helps draw in assets

Modera Wealth Management principal Tom Orecchio knows asset growth is the name of the game for financial advice firms, so he’s pursuing two strategies to expand the business.

The Westwood, N.J.-based firm has spread out business development responsibilities to all advisers and wealth managers at the firm, not just owners, he said. That change in approach is helping boost growth organically.

The firm’s leaders also have mergers in mind.

“We have embarked on an inorganic growth program where we have merged with two other firms,” he said. “We’re in the process of talking with five or six more.”

The largest union so far was with Back Bay Financial Group, led by Robert Siefert, nearly five years ago. That combination was key to helping Modera eventually top $1 billion in assets. The firm, which also has offices in Massachusetts, Florida and Georgia, stands at about $1.6 billion in client assets presently.

Modera received a 2014 InvestmentNews Best Practices Award in October after being identified as one of the top performers among participants in the Financial Performance Study of Advisory Firms. Of the firms studied, Modera ranked highest for its technology investments and pretax income per owner.

The firm also was recognized for its focus on revenue quality, with high client asset minimums and a wealth management process that makes it easy to target clients.

The two most difficult challenges Mr. Orecchio faces are classic industry conundrums.

The first is finding new clients, which the firm is tackling head on by setting new business goals for each of the firm’s 14 wealth managers and seven financial advisers, Mr. Orecchio said. At Modera, advisers typically have five to 10 years of experience, while wealth managers have 10 or more years under their belts. Mr. Orecchio and eight of the other wealth managers are owners.

“We have been implementing more of a business development culture that we haven’t had before, other than with owners,” he said. “We’re trying to get everyone involved in the process of business development.”

The second fundamental challenge is hiring and retaining talent. The mergers have brought seasoned professionals to the firm, but Mr. Orecchio said developing its own advisers is just as important.

Modera always has had a crop of young analysts who do not have business development goals but who support advisers and are included in client meetings and meetings with prospects.

“To get a client or prospective client with $3 million to $5 million to trust a 27-year-old with managing their portfolio is very difficult,” Mr. Orecchio said.

The firm currently has five analysts it is grooming to become advisers.
“I grew up in this business and it’s not easy,” he said. “I have a lot of war stories of clients saying they have adult children who are older than me; one woman said she had stocks older than me.”

Client meetings always include a wealth manager and either an adviser or an analyst. This team approach gives clients another personal connection at the firm beyond their primary wealth manager and administrative contacts, Mr. Orecchio said.