Hurley: This suggests more à la carte pricing as opposed to prix fixe.

Thomasson: Some project fee, some fixed fee, some asset-based. However, more is going to drop to the bottom line because your people will be better at articulating and communicating your value proposition.

Hurley: Obviously, your value proposition has evolved from when you first started.

Thomasson: Given that I didn’t have one initially, yes, but we now spend a lot of time discussing it.

Ours starts with our brand. People have to be convinced that your brand is something that they’re willing to pay for annually. Brand is tied to the quality of your people.  

We approach branding using the letter “Y.” On its left side there are hundreds of touch points that we have with advisors, vendors, clients, potential clients, charitable organizations—maybe even competitors. The right side involves what we want to look like and how we touch these people from the grain of our wood paneling down to our wallpaper down to our Council Craftsman conference tables.

We study great brands like Aston Martin, Ferrari, St. Regis, Cartier—ones that are incredibly successful but not pretentious—and try to emulate them. For example, how does the Four Seasons touch me when I check in? How do they communicate with me prior to getting there and after I leave?

Hurley: So brand is the client experience?

Thomasson: It includes the advisor experience, the competitor experience, the vendor experience, the prospective client experience, the actual client experience. An organization’s reputation has to extend well beyond the client experience, because in many cases, before you were a client, you were a prospective client and before you were a prospective client you were a friend of an advisor.

Hurley: Let’s shift to what will firms have to do in the future for clients that they do not do today?

Thomasson: Ten years from now, any investment recommendations that do not involve alternative investments will be completely commoditized.

Hurley: Aren’t they already?

Thomasson: There are still a lot of people trying to justify active over passive, and at some point in time, clients are going to say “It’s just not worth it for me to chase 0.50% for 0.50%.”

Also, ultra-high-net-worth firms are going to offer aspirational investing using high-alpha products that probably don’t even exist in this space now.
Successful firms are going to say, “It’s OK to have a part of your portfolio that’s diversified, but the rest we don’t want to diversify. We want to try to create wealth. Just because you’re 60 does not mean that you’re going to die tomorrow. You still have another 30 years to live or 50% more of your life to live.
You’re worth $50 million and you only need twenty. Let’s grow your family portfolio aspirationally.”

This suggests alternative plus passive. And that fees for anybody targeting $1 million or $2 million clients are headed south. Their value proposition is very modest.

Hurley: But won’t future technology make it very cost efficient for them to substantially expand their value proposition?

Thomasson: I hope you’re right, or they are going to go the way of a buggy whip.

Hurley: How big a role will the Internet play in the recruitment of clients?

Thomasson: It’s already significant and will become exponential. Nobody comes to a meeting without visiting our website first. When they come in, I can tell by the look on their face or their handshake how much time they spent on our website. This is just the beginning.

We are all still in the early phase of using search engines and websites. Quite frankly, at some point firms will have two websites: one that anybody can see and access, while the other potential clients will have first gone through a sort of underwriting process to see if they fit our model or value proposition.