Adviser's Consultant: Creating a new service for clients with smaller nest eggs

Biz requires new tech, different fee model and dedicated leader

Feb 15, 2017 @ 4:00 pm

By Liz Skinner

Brandon Johnson decided that so many of Johnson Financial Group's family office clients were asking if the firm could help their less wealthy friends, neighbors and relatives that he'd create a new business to serve them.

The 15-year-old multi-family office recently opened JFG Wealth Management to provide financial advice to individuals and families who have $3 million to $10 million in assets under management. The new wealth management arm of the Denver-based family office relies on the traditional firm for compliance, research, accounting and trading, but has its own dedicated president.

"We're offering goals-based financial planning services and giving these clients access to leading investment managers they couldn't normally invest with," Mr. Johnson said.

Mr. Johnson hired Gary Lutz, formerly a Wells Fargo adviser in Denver, as JFG's president to make sure he didn't dilute his own role working closely with the family office clients.

The switch required the firm to invest in technology, including having Envestnet build an online portal for clients. Mr. Johnson sought tech partners to give clients access to their financial information from anywhere, including through mobile apps for phones and tablets.

"Technology has been a big component of really trying to make sure we are preparing this firm for the future of financial advising," Mr. Johnson said. "The tech investment we made is significant."

Clients can almost entirely onboard themselves online through the system, but they won't be required to do so, Mr. Johnson said.

(More: 10 ways to embrace trends radically changing financial advice)

The firm created a website aimed at its new market and it includes a video about the history of the original financial advice provider.

Other than the website, JFG plans to rely on its existing relationships with the family office side to generate prospects.

JFG's plans for serving clients also differs from the family office, which serves 29 clients with all aspects of their financial lives. It's a high touch approach.

(More: Adviser's Consultant: Provide these services to attract younger clients)

JFG will provide up to four meetings a year to its clients, although ideally one of those meetings will be in person and the others will be virtual, Mr. Johnson said.

"Our experience with current clients' next generation is that they really like the video chats," he said.

Fees for JFG clients are 80 basis points on the first $5 million, 60 basis points for up to $10 million and after that it's negotiable.

Fees are "significantly higher" for Johnson Financial Group clients, Mr. Johnson said.

Tip Sheet

  • Hire a dedicated person to oversee the new service offering to make sure the original business doesn't suffer.
  • Invest in technologies that appeal to new client targets, such as mobile access to accounts through apps.
  • Create a marketing plan for the new business including a dedicated website and social media strategy.
  • Align customer fees with service expectations.
  • Leverage company resources at the new business when possible, such as research and compliance.

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