An Integrated Package
It's not enough, of course, just to have a longer menu. Clients would be rightly skeptical of anyone who claimed to have mastered every aspect of money management and advanced planning.
Financial advisors, as a rule, are not obliged to explain how a product or service might fit into the bigger picture. To a certain degree, the relationship is one-dimensional. For the wealth manager, the relationship is more intricate. Each product and service has to be carefully placed in the context of the client's overall financial plan and life. But it has to be made clear that the wealth manager is not trying to be all things to each client. One of a wealth manager's key strengths is access to a trusted network of specialists who can be called upon on an as-needed basis (those specialists are also an important source of referrals). The focus is on the interplay of products and services, and the way they can be integrated to address a client's complete financial equation over the course of a long and mutually beneficial relationship.
Having to put every product and service in perspective is clearly more demanding and time consuming, but it improves the relationship while opening the door to more potential sources of recurring revenue.
The Wealth Management Team
The final difference between financial advisors and wealth managers relates to the way they work. Advisors, focusing on investments, tend to fly solo. They're not used to asking for a second voice or opinion, nor are they expected to. The wealth manager, thanks to the broader view of the client's financial needs, will have the opportunity to recommend many more products and services, as we have seen. But that doesn't mean an aspiring wealth manager has to evolve overnight from a broker into a financial jack-of-all-trades. A radical transformation like that, besides being well-nigh impossible to make, would leave a client rightly suspicious or nervous-especially if an advisor abandons the strength that may have attracted the client in the first place, whether it was picking stocks or variable life insurance. That's why one of a wealth manager's most important roles is to assemble and manage an expert advisory network, the team of specialists who can be individually called upon for their expertise on a case-by-case basis.
As the client's CFO, a wealth manager must know who to summon and when, and must also coordinate the lawyers, money managers, accountants, insurance agents, trust officers, bankers and other advisors. A wealth manager also knows how to position each member of that advisory team so that a specialist is seen as an integral and informed part of the team, not as a free agent.
In sum, a wealth manager must have a different mindset, a grasp of the bigger picture, which leads to a broader understanding of client need and the advisory resources to meet every one of those needs.
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.