There are two types of sports: individual sports and team sports. Golf is, perhaps, the most clear-cut example of an individual sport. Football is a classic example of a team sport. Here's the important point-capabilities such as investment management or life insurance are like golf, and wealth management is like football.
In investment management services, as in golf, your success or failure is largely dependent on your own knowledge and skills. You succeed or fail by what you bring to the table. Wealth management is different. While success still hinges on your performance, it also hinges on the performance of all the members of your team. Their expertise. Their communication skills. Their professionalism. And most importantly, everything must come together in unison as part of something greater to achieve success.
Let me close the loop on this point with just one more sports cliché. If you want to win the game, you must play the game. Therein lies the biggest problem for many of today's financial advisors. They have backgrounds that were heavily dominated by one single capability or only a handful of them, and, thus they are bringing only that perspective to wealth management. They aim high, but approach it as an individual discipline rather than one that relies on the efforts of a team. They may be playing the game, but it's on the wrong field, with faulty equipment, and not by the rules. To succeed at wealth management, a group of experts work together as an orchestrated whole.
We know from both observation and hard evidence that wealth management is one of the most consistently profitable business models and creates opportunities to strengthen the relationship between clients and their advisors. Year in and year out, research shows that wealth managers generate more revenue, have higher incomes, have more fee-based assets under management and have fewer, wealthier clients to deal with than financial generalists with a limited range of capabilities. Assuming you buy in to these findings and want to build your wealth management practice, it still leaves a critical list of questions that must be answered. These are the first three that an aspiring advisor should consider:
What types of professionals will you need?
What skills and traits must they possess?
What else contributes to the wealth management team?
Creating The Team
Most well-established wealth management practices are organized around three primary specialties-tax and estate planning; accounting; and life insurance-as well as around the coordinating entity, which frequently oversees the investment advisory activities. This means that the core members of the team include an attorney, an accountant, a life insurance agent and an advisor, and together these people can resolve most wealth management issues facing clients.
Based on the wealth level of your clients and their corresponding problems, other team members may be required to address more complicated cases and specific issues. These might include credit experts, property and casualty agents, advanced planners and valuation specialists.
At the center of the team is often the financial advisor. In this role, a professional must fill at least two functions (though he often does more). The first is to assemble the team by evaluating the credentials and overall quality of the professionals. The second function is to ensure that the team members have as much information as possible about the client and the particular issues at stake so they can contribute their expertise as effectively as possible. Before any meetings take place, all team members should also be briefed on the client's personal style and preferences so information is presented in a tailored fashion. As mentioned previously, the center of the team may also be an expert in his or her own right and provide one or more of the services that the client needs as part of the overall plan. In these scenarios, the advisor must balance his role as an expert with his responsibilities as a team leader.
Members of a wealth management team are either internal or external or a combination of the two: When the specialists are "internal," they're employees of your firm. For instance, a private bank will certainly have tax attorneys on staff. Another scenario might be the private client division of a large investment banking firm with access to estate planning specialists through the firm's trust company. The niche experts may be part of your division or housed in a special unit, but available as a resource to you and your clients. The advantage to this structure is that resources are in place and free of charge. The drawback is often that there are too few specialists for the work available.
When the specialists are "external," they work in their own firms and you must build your business arrangements and working relationships with them. In effect, you need to create a virtual network of experts that you can call upon to help you address specific client needs. The advantage of this structure is your ability to construct customized teams for each client case, and only bring in experts when needed. Experience, however, has shown that creating and maintaining a virtual network of high-quality specialists can be arduous and requires ongoing oversight and nurturing.
Of course, you might rely on some specialists housed within your firm and others who are not part of your firm to get the right mix of capabilities. Of paramount importance is the ability to access the appropriate specialist when their expertise is needed.
Simply identifying that the resources exist is not enough. As the central coordinating point, you will need to develop a working relationship with all the professionals and help facilitate the conversations and collaborations between them as they work on behalf of you and your client.Assessing The Members
You've worked hard to build your reputation in the industry and with your clients, so it stands to reason that every specialist who has the potential to be part of your team should operate at a level comparable to your own. At a minimum, we believe candidates should display the following four qualities:
Expertise. A specialist must possess the credentials, experience and talents of his or her discipline. Without the requisite expertise, the professional will be useless to the wealth management process. The expertise in question must complement your competencies and skills without being redundant or conflicting.
Professionalism. Clients come to you for your professionalism and you want team members to extend you the same courtesy. A specialist that is responsive, composed, committed to his business, effective with clients and knowledgeable is a good start.
Integrity. The highest ethical standards are indispensable, and you should know up front how the specialist operates and what he considers unacceptable.
Chemistry. Ideally, there will be a comfort level between you and each of your team members, as well as a group rapport. Understanding and respecting one another and how each functions as part of the team will help the process run more smoothly and help each team member operate at the highest level.
While there are often core members of a team, its overall structure should remain flexible; this allows you to bring in different specialists based on the needs and desires of your clients and replace members that may not be up to your standards.
Supporting The Collective Effort
Much of successful wealth management is in the up- front strategy and planning-ensuring that you and your team members have a clear understanding of the issues, the resources, the regulatory environment and other factors that must be part of devising the perfect solution. However, once a course of action has been recommended and approved, it is time for implementation. In order to execute the firm's plans, a wealth manager must have access to a platform of products and services that can bring the strategies and techniques to life for a client. That platform must also be built on technology that works well. In many ways, the right platform and good technology are the price of admission. Your client will expect you to have them, and without them you cannot deliver the thought leadership and state-of-the-art strategies of your team to your client. The reverse is true as well; a broad platform with solid operations is not wealth management without the expertise of you and your team as the filter.
Expanding In Philosophy And Practice
A professional that is transitioning to a wealth management model must be aware of his background and perspective to ensure that these things won't limit or impede his efforts. The highest-performing individual contributor will never be successful as a wealth manager unless he adopts a mindset that includes a broader suite of capabilities backed by a group of specialists. Part of the transition means operating as part of a team, and part of it may include coaching the team. These are vastly different skills from those needed for individual success, but ones that can lead to stronger, deeper client relationships and a more stable and profitable business.