3. They are not project managers.
Now let's take these three issues one by one, beginning with a client's uniqueness.
Many financial advisors use a static process when working with clients, affluent or not. Tried and true, it's hampered by being premised on the importance of a client's assets and investments, not their entire financial life, with its myriad implications. Admittedly, "unique" is a word that's bandied about ad nauseum by advertisers and shills in our business, but it takes on real legitimacy and resonance within the context of wealth management. First, clients, especially affluent clients, want to think of themselves-and want to be thought of-as unique. They don't want to be one of the pack and they don't want off-the-shelf solutions that imply they're not unique. Furthermore, through the lens of wealth management, they are unique. How many clients on a financial advisor's roster, for instance, are 55, twice divorced, childless, have $35 million in highly concentrated stock, haven't updated their life insurance policy in 17 years, own a Cezanne, don't have an heir, plan to move to Pago Pago, hang-glide, and want to establish a charitable foundation for inner-city artists? It's that level of detail, uncovered by the Whole Client Model, that makes the affluent client truly unique and dictates the right combination of products, services and solutions for the wealth manager to deliver. And that level of detail cannot be fit into the traditional fact-finder or entered into a computer program that will spit out a solution. Indeed, a wealth manager may have to call in his or her entire team of specialists to brainstorm a solution. And what's the payoff for all the extra research and collaboration? A more precise solution or suggestion, a more binding relationship and the potential profit from a much longer menu of customized products and services.
Solutions Not Products
Part and parcel with the concept of client uniqueness is the idea that solutions, not products, are the answer to each client's needs. Research has shown that affluent clients can be suspicious of larger financial services firms because they think that products are being pushed on them, regardless of whether or not they're the right products, to meet quotas or satisfy management. Simply stated, for some financial advisors, the products and services come first and then a client is found; for wealth managers, the client comes first and then a solution is found.
Project Managers Wanted
Lastly, there's the idea of project management. A financial advisor would not typically manage an integrated and highly complicated process that involved the input and expertise of a number of other advisors. But as we all know, and as the thumbnail of our hypothetical client demonstrates, affluence brings complexity. And no individual wealth manager, however talented, is going to be able to address every aspect of an affluent client's life. In fact, each financial professional has a core strength, be it investment or insurance or estate planning, and that skill should not be abandoned once he or she becomes a wealth manager. In many cases, it's what attracted clients in the first place, after all. That's where the team of specialists already mentioned comes in. The wealth manager must oversee the team, keep it focused, and get its members to think-and brainstorm-on behalf of each client in question. The team, in turn, allows the wealth manager to deliver-and be remunerated for-solutions that he or she might not have previously been able to offer, and also to get referrals from members of the team to serve as a specialist for another wealth manager.
In conclusion, wealth management is profitable and it's what affluent clients want. But it's not an easy transition to make. It calls for a level of interpersonal contact that not every financial professional may be comfortable with. It means building and managing a network of specialists that can be called in to address the specific needs of affluent clients. And it requires letting go of the traditional mindset that has been the norm for our industry for many years, and understanding that each client is unique-and that each client has a unique range of needs waiting to be met.
Hannah Shaw Grove is managing director and chief marketing officer of Merrill Lynch Investment Managers. Russ Alan Prince is president of the consulting firm Prince & Associates.