Financial advisory is evolving to expand beyond simple asset management and many advisory firms are following suit by bringing in outside experts or partnering with firms to tackle areas they may not have the expertise in.
Advisors say the new tactics are needed to meet the demands of clients that go beyind investing, including inheritance planning, saving for education and retirement and managing taxes.
“The RIA space is evolving just like every other part of the financial industry,” said Paul Feinstein, CEO and founder of West Hollywood, Calif.-based Audent Global Asset Management. “They’re trying to do everything internally so they can expand their footprint and their connectivity to the client.”
Firms have brought in lawyers, CPAs, credit managers, and even a clinical psychologist to help clients achieve their financial goals.
Audent, which works with high-net-worth clients and family offices, has partnered with a trust and estate firm to assist clients looking to manage their assets over generations, and last year it brought in a real estate group to work with clients wanting to invest in real estate, according to Feinstein.
Great Falls, Mont.-based D.A. Davidson & Co., as another example, hired a vice president and director of cash lending solutions to works with investors looking to take out a loan, according to Michael Purpura, the firm's president of wealth management.
The firm also assigned an advisor to serve as the head of business advisory services and equity capital markets liaison. He works exclusively with business owners and guides them through the decisions they must make, including succession planning, and whether to sell the business, or partner with another firm.
“When an FA gets a call from a client [who is a business owner] ... they need someone who they can brainstorm with and [our head of business advisory services] created a really disciplined profiling process to cut to the core of the problem, and provide them with advice alongside the advisor,” Purpura said.
St. Louis-based Edward Jones is considering bringing estate planning, business valuation, and succession planning in-house because those have been the areas clients have been demanding, according to David Chubak, head of the U.S. business unit at Edward Jones.
“Instead of necessarily building the capabilities in-house, we look to partner with leading industry players there to work together to create a joint offering that can really serve the needs of clients in a broad way,” he said.
Expressive Wealth, a Chicago based RIA firm that launched this month, focuses on families, younger investors and women and has brought on a clinical psychologist who works with advisors and clients to handle difficult discussions, said Vanessa Martinez, chief executive officer and managing partner of the firm.
The chief clinical officer, Patricia Villarreal, will be on hand to work with families having difficult discussions, such as those that center on inheritance and succession planning. She will also guide the advisors on ways to handle similar situations, Martinez said.
Leaning on experts in outside fields allows the advisor to provide their clients with the best possible experience while not stretching themselves too thin, advisors say.
“It’s OK to leave each expert to their own and that’s why you need a team,” Martinez said. “I don’t need to be the expert in everything, I need to have great partners by my side who can execute.”
An added benefit to bringing in outside experts is it helps address all aspects of a client’s investment, minimizing the chances that they might go elsewhere, advisors say.
“We believe [advisors] need to be spending more time in front of their clients in order to be able to offer those types of services,” said Anand Sekhar, vice president of practice management and consulting at Fidelity Investments. “Getting them out of weeks of doing something like trading enables them to maximize their time to foster deeper levels of intimacy with these clients and then also be able to drive organic growth,” Sekhar said.