Pershing

Keys to Becoming a Wealth Manager

Issue 10 - October/November 2009

For investment professionals trying to increase the number of high-net-worth clients they serve, one route is to expand your services. You can do that by delivering holistic wealth management—that means using a practice model delivering comprehensive services from a team of experts in areas such as financial planning, tax strategies, estate planning, investment planning and insurance, as well as providing frequent client interaction and sophisticated, customized portfolios.

The opportunity is significant—there’s a growing demographic of retiring baby boomers, as well as a large population of high-net-worth individuals, all of whom require deeper, more comprehensive financial advice than ever before. Becoming a wealth manager is a complex undertaking and it may require making substantial changes in your practice and client base. Here are key steps recommended to make the transformation successful.

Step 1: Identify your current high-net-worth clients.
These relationships will serve as a valuable entrée to other wealthy individuals. In addition, you will be able to tap into your existing high-net-worth clients for input and insights as you begin to build out your strategy for delivering holistic wealth management.

Step 2: Define your business model.
Start slowly—developing a successful wealth management practice takes time. It is an evolutionary process. In the early stages, you’ll need to determine your areas of strength and those that can be assigned to other resources whether in house or outsourced to a third party. Then, build your team gradually, starting with administrative staff to support service delivery and reaching out to experts in your network such as attorneys and CPAs to supplement your offering. As your practice begins to grow you may decide to move to a more expansive team which may include a partner, additional employees with specific expertise such as tax planning or investment management, or a network of virtual team members.

Identify your target clients.
Delivering comprehensive wealth management limits your ability to deliver the same level of service to everyone. As you look to evolve your practice you will need to determine your ideal client. Once you have decided which segment of the affluent you will serve, the next step is to review your current client base. You may need to transition from your client list some—or many—households with insufficient assets to make your new model viable. The deeper relationships you form as a wealth manager are time-consuming and will require that you limit your client capacity to perhaps 200 per advisor.

Segment your clients.
As you would with any practice, divide your clients into categories or tiers, based on factors such as total investable assets, number of referrals or net worth. Then, determine the level of service you’ll provide to each client category. This will help with time management and ensure you are delivering an appropriate level of service to each tier based on client needs.

Focus on service.
Affluent investors choose their wealth managers based on the quality of the interactions, communication and service. To meet and exceed your clients’ expectations, it is recommended that one individual act as the lead professional on each relationship, with supporting staff responsible for the day to day service. This may take some getting used to for clients who expect to speak with you for all of their financial needs. In order to deliver the depth of advice required by the affluent, you will need to delegate certain tasks.

For more information regarding key considerations for becoming a wealth manager or expanding your existing wealth management practice, we invite you to refer to our new guidebook, Integrated Wealth Management: An Investment Professional’s Guide.