Jeff Shipley is a founder, partner and consultant with Lumina Consulting, the team behind the successful launches of Private Wealth Asset Management and Fidelis Capital in 2021. Lumina aims to help create a superior client experience and deliver on the promise that private banking once made.

Russ Alan Prince: Lumina Consulting has identified a trend within the private banking industry where increasing numbers of private bankers are leaving private banking institutions in favor of independence. Can you explain the factors that are contributing to this trend and what it means for the UHNW consumer?

Jeff Shipley: For generations, private banks were the place where the consumer turned for a better client experience and access to the top professionals a bank had to offer in order to help them manage the financial complexity in their personal and business lives, often through multiple generations. Today there is a change. Private banks are moving towards a service and structure that more resembles big Wall Street brokerage firms than the promise once provided by private banks. What does this mean? It means change! Change to how clients are taken care of, for example. 

In the old world of private banks, a team of advisors would take care of the UHNW family. Each team member would know that family well because they work with a limited clientele by design, whether they are the estate planning specialist, the trust officer, the investment specialist, etc.

Today these specialists that surround the clients are not dealing with a limited group of clients and can’t know them all well because they are being asked to deal with far too many relationships. They are not local but instead are told to work in corporate offices in large cities, serve the advisors, and talk to their clients mostly by phone. This creates turnover in the advisors and the specialists around them. That turnover causes the client experience to change as the client has to retrain new advisors and specialists constantly instead of having those same professionals taking care of them. 

To be clear, we are not talking about a few advisors. We are talking about hundreds, if not thousands, of advisors and specialists who have left private banks over the last 5 years.     

Prince: Why would the banks that own these private banks allow this to happen?

Shipley: In short, the private banking model is far more expensive to operate than the brokerage/Wall Street model. Imagine having a specialist in planning who is probably a former attorney, a specialist in trusts, another specialist in family dynamics, one in investments, and perhaps one in lending, all dedicated to a group of 300 to 900 clients in Kansas City versus a model where all those specialists sit in Chicago and serve 10,000 clients as they do in the brokerage model. There is less job satisfaction for them, so they leave often, the advisors get frustrated, so they leave, and the client is just left with lots of change.       

Prince: Lumina Consulting is the firm behind the launches of Private Wealth and Fidelis Capital. Why were these teams so successful?

Shipley: Lumina understands the wealth professionals at private banks because we were private bankers. We understood that the private banker desperately believes in a fiduciary culture that is best for the client but was frustrated by all the change and an inability to control the client experience. Every time they would turn around, another resource was being taken from them and their clients, and they had to make a change to stick up for their clients and deliver on the promise that private banking once made.

We didn’t launch Private Wealth and Fidelis alone! We came alongside some very talented people and shared our own experiences of having left big institutions, how to build a better client experience, and best solve these issues. We funded the projects and taught them what we knew, but it was these professionals at both firms and their deep relationships with their clients who both wanted a better platform and better client experience that drove the remarkable success.

Prince: What’s Next for Lumina?

Shipley: Lumina has partnered with Alpha Capital Family Office. This is a boutique outsourced family office in Denver that we believe has the right model to take care of multigenerational business owners and UHNW families. Alpha Capital Family Office provides family office solutions that help their clients succeed on purpose while focusing on their family, values, and goals.They have developed better tools and services than the private banks have and, to no surprise, have grown dramatically. Today they are facing capacity issues. Lumina is going to help them grow by finding the right wealth professionals at private banks to come alongside them, take back the client experience, and grow under a rebranded name.

We are very excited about this because the systems and service models are built to help any family run an outsourced family office, yet there is room for a new set of partners to put their stamp on the growth of this firm and what the client experience will be as a partner, not an employee with all of the financial benefits that can come with ownership. Being a part of that is the work we like to do at Lumina.   

Russ Alan Prince is the executive director of Private Wealth and a strategist for family offices and the ultra-wealthy. He has co-authored 70 books in the field, including Making Smart Decisions: How Ultra-Wealthy Families Get Superior Wealth Planning Results.