Many wealth managers get into the business with confidence and high hopes, envisioning that intelligence, ambition and devoted customer service will prevail.
Many wealth managers get into the business with confidence and high hopes, envisioning that intelligence, ambition and devoted customer service will prevail.
In most cases — at least in the beginning — that is what happens.
With drive, sharp instincts and solid training, you can make a business of wealth management. You can build a client list and a reputation, and even start to grow.
However, three to eight years into the process, many wealth managers experience a new set of challenges.
It often begins with difficulties in managing employees.
You may find you are increasingly frustrated with the skill level of your staff members, from administrative-support personnel to higher-level specialists.
Then you may experience problems with partners or you may find that you don't have anywhere near enough of the “right” clients — those who are both personable and profitable to you.
The business that was once thrilling and growing is now replete with headaches.
All this is inspiring some firms, like ours, to do something differently. Here are a handful of strategies to help your firm rethink the concept of wealth management advice:
Make a commitment to integration. Instead of cherry-picking sections of financial expertise and creating a one-trick-pony operation, offer the elements that any high-net-worth individual will need to succeed. That includes financial planning, asset management, insurance and group benefits. Use this integration to grow.
As an example, you may begin a relationship with a high-net-worth individual by providing just insurance coverage, or with someone else who needs only your asset management expertise. Over the course of those relationships, learn the client's wants and needs, and then look for other ways to provide high-quality services through your network of strategic partners.
By integrating all these elements within your company philosophy, you can run your organization in such a way that your clients are as financially secure and as happy as possible. Although many firms may offer a variety of services, your philosophy and execution will differ. In this version of integrated services, all elements are equal at the table, and each is given its due in the company's structure.
Take a holistic approach to infrastructure. Set a smart foundation, and the rest of your building will go up safe and strong. In order to be successful, a wealth management firm must create the systems and processes that will allow it to function, adjust and ultimately beat its direct and indirect competitors.
Many firms deal with individual infrastructure needs as they arise, but a more holistic approach to infrastructure should be a continuing part of your vision for growth. From administration and compliance to marketing and information technology, it can become an area in which you stand apart from the competition.
Select the right clients. Create your firm with a commitment to quality, not quantity. Once you begin to act on that, you will have a client base you love, rather than one you find to be a burden. Creating a quality client list is a complex process. It requires research and investigation to discover what makes a great client, what keeps that client great and how you can attract more of the same.
This can be a difficult task, but it isn't as hard as running a business with clients you don't like.
Make your practice all about teamwork. Everyone at your firm, from the administration staff members to the partners, must feel an indelible sense of team. Although your sales professionals are all building their individual client bases, everyone must commit to building the firm.
All employees should feel a sense of unity, of loyalty and of fair play. They should all be committed to one another in a healthy, competitive way.
Everyone should truly want the best for one another, and for each individual, as well as the firm, to grow.
These are the basic building blocks of a new kind of wealth management firm.
The issues that our industry faces require change that is deeper than tips you can pick up from a luncheon speaker. It is the kind of change that unravels years of industry tradition and remakes the business of wealth management in a new image.
The time to embrace this change is now.
Tom Henske is a partner at Lenox Advisors Inc., a wealth advisory firm.
