Times are going to get harder for the all-purpose generalist advisor. Those advisors who want to thrive are going to have to specialize and find new ways of doing business to be more competitive, and those who don’t are going to get left behind, says one wealth strategist who has come up with his own innovative business model to get ahead.
Fred Hubler is the president and chief wealth strategist of Creative Capital Wealth Management Group in Phoenixville, Pa. He bemoans the fate of generalists.
“They don’t have a niche; they don’t have a deep skill set. They are kind of a general doctor. But in the financial services world, clients are going to want to know someone that knows their profile and knows their path,” he says.
For his own part, he started doing alternative investments 18 years ago to be more competitive. Mutual fund giant Vanguard is in his backyard, he says. He couldn’t try to be like them. “I was always going to add value in a different way and that is providing accredited investments to investors, which is something I don’t think Vanguard is going to be doing anytime soon,” he says.
Hubler uses a retainer model—he charges a fixed fee for all services. His clients pay an hourly, monthly, quarterly or annual fee and receive “sound, comprehensive and uncompromised financial planning advice in return,” he says. His process involves holding meetings with clients in which he lays out with them specific milestones that point them toward their long-term goals. (This is done using his trademarked retainer-based plan called the “Milestone Clarification Process.”) It doesn’t require client assets to be managed by the firm or for the clients to buy products. “We can give advice on assets anywhere,” he says.
And accredited investors in particular are more likely to benefit from his fee model, he says, because they are business owners or highly paid professionals who have money in different places. “They have a lot of dollars, but they are not movable to an advisor, so they don’t have an advisor.” (Accredited investors are individuals or couples with a net worth of either more than $1 million or an income of more than $200,000—$300,000 for couples—in the past two years.)
“If they hire us, the money isn’t moving. It’s staying in your 401(k). It’s staying in your real estate. It’s staying in your business,” he says.
The firm has expanded into 19 states. “Referrals are through the roof.” He notes that people initially do not reach out to him for his retainer service, but once they come in and learn about it, they want it. “So we aren’t leading with retainer because no one really knows what that is. We are being referred to because we are solving problems … and then they find out about [the] retainer.”
His growth has stemmed from three specialty services in high demand from clients.
The first is their need to minimize capital gains taxes. With the stock market so frothy, Hubler says many investors are trying to reduce their equity exposure. But at the same time, they don’t want to take taxes on what they sell.