Wealth Mapping

June 7, 2007

In November 2006, the most significant new oil find in U.S. territory since Prudhoe Bay in Alaska was discovered in the deep waters of the Gulf of Mexico in what is called the Wilcox Formation. It is estimated to have somewhere between three billion to as many as ten billion barrels of oil in it. In the jargon of the oil industry, it is known as a SuperGiant. This is hitting the mother lode. To give you an appreciation for the sheer enormity of this find, the last SuperGiant discovered in the entire world was in 1979 in Siberia.

However, let me pose a question. Why was something so big, so valuable, not found sooner? Using the lowest estimate of its reserves-three billion barrels-the sheer value of its size (at $60 per barrel) is quadruple the entire fortune of the world's richest man, $180 billion, and it's just lying in the ground a few hundred miles from Houston, a city built on the oil industry more than 100 years ago.

Why did this treasure lay hidden until 2006? It's because the Wilcox Formation is known as a deep-water well. Once you go to the bottom of the Gulf of Mexico (7,000 feet down), you then need to drill through 20,000 feet of rock before being able to access this enormous resource. It is roughly as deep as Mt. Everest is high. To access this enormous source of wealth, the industry had to develop new tools and technology that would allow them to overcome these many challenges, penetrate these many layers and get to the wealth deep below the surface.

What does that have to do with financial services? A great deal, actually. Among the client rosters of many advisors lies untold, and untapped, opportunity. It doesn't come from the hackneyed idea of achieving greater share-of-wallet, but from a fundamental shift income-from one derived predominantly from investment management to one based on wealth management.

Why have these opportunities gone largely untapped? There are two reasons. First, much like the oil companies went after the reserves close to the surface, investment managers have been going after the bounty of opportunities lying right at the surface. Second, and most important, as an industry, advisors have lacked the profiling tools necessary to move beyond the familiar investment management layer and drill down to the deepest, but most profitable, wealth management layer.

Wealth Management: From Buzzword To Business Model
Let's address the subject of "Wealth Management" and what it means. It has become such an overused term that it is in danger of meaning nothing. From the investment advisor's perspective, wealth management can be defined simply as: Expanding beyond investment management commissions and fees. In other words, advisor's income is no longer solely tied to investments alone. However, that is only half the picture. It takes into account the professional's perspective as an advisor, but what about the client's perspective? What do clients think wealth management means? We actually conducted some research on this subject, the results of which were very telling and a bit counterintuitive. We offered wealthy clients four options on how they define wealth management, including:

A. Investment Ideas/Product Ideas

B. Solutions

C. One-Stop Shopping

D. Noninvestment Ideas/Products

An overwhelming majority of them, or 77.6%, chose B, Solutions; 49.9% chose A, Investment Ideas/Products Ideas; 17.3% chose D, Noninvestment Ideas/Products; and a mere 15.3% chose C, One- Stop Shopping. What insights can we take from this? First, contrary to popular belief, "One-Stop Shopping" isn't of particular interest to the wealthy. True enough, some affluent clients aggregate their services with one advisor, so that it resembles one-stop shopping; however, that's not how they got there. They got there because their advisor brought them the "Solutions" they sought among a broad spectrum of wealth management services. What the client wants is someone who makes the effort to understand their whole picture, to help them identify unforeseen problems and then proactively bring solutions to the table. This is wealth management to them.

How can advisors bridge the gap between their perspective on wealth management and their client's? We have found it useful to define wealth management the following way: Wealth Management = Matching Client Problems with Financial Product Solutions.

The Financials Of A Wealth Management Business
There is a powerful financial incentive to building a wealth management business versus an investment management business. A recent comparison of the two business models revealed the results in Figure 1.



Gross Production


Avg. # of Clients

Investment Managers




Wealth Managers



N = 1,281 Financial Advisors, Source: Prince & Associates, 2006

Clearly, there are enormous benefits to being a wealth manager from a straightforward income perspective. Perhaps more important, a quality of life and sustainability benefit comes from working with far fewer clients while simultaneously in- creasing income. However, advisors must overcome significant hurdles to be an effective wealth manager, foremost of which is expanding their knowledge deeply into areas that lead to the discovery of problems that can be addressed with financial product solutions. It is important to note that while many advisors pride themselves on extensive client knowledge (the children's birthdays, for example) or keeping records on all client contacts, most of this information is used to feed the deepening of a client relationship in an effort to build client advocates for referral purposes. Offering wealth management is something quite different, and what we'll look at is specifically designed to identify wealth management needs based on the linkages between different areas of the client's life.

Client Knowledge Within A Wealth Management Framework
Take a moment to consider a top client who is a likely candidate for wealth management. This client should be one of an advisor's top 20 clients, have a net worth of at least $10 million and have some complexity (issues without solutions) to his or her life. Now, with just one top client in mind, answer as many of the following questions as you are able:

1. Spouse's name?

2. Children's names?

3. Net Worth? Where is it?

4. What are the client's top three objectives for life?

5. Debt: how much and where?

6. What charities do they give to?

7. Who are their business partners or colleagues?

8. What are their names?

9. How do they like to be communicated with? (frequency/mode)

10. What hobbies or interests do they have?

How many were you able to answer correctly for your top client? We conducted a survey on these very questions (which are part of the wealth management tool, but not all of it), to determine how many advisors could correctly answer all ten for their top client. Here are the results: 89.6% got at least three questions correct, 61.2% got at least six questions correct and 6.6% got all ten correct. When I run this exercise in coaching sessions with top advisors I find that they fare much better. On the other hand, when we start to look at more of their wealthy clients, their top clients, their top 30, the percentages start to bear out. Overall, there is one clear inference from this exercise, and that is the great need to deepen client knowledge within a wealth management framework.
The question now shifts to a methodology, replete with tools and systems that can be used to move beyond the investment management layer of knowledge down to the wealth management layer.

WealthMapping: A System To Match Client Problems With Financial Product Solutions
If someone asked who was the smartest person to have lived during the 20th century, many people would answer Albert Einstein. Einstein was a physicist and, like most physicists, he used a blackboard to think through complex riddles of the universe. But why do physicists use the very tool used by school- children? The answer is that when dealing with a complex problem, there is simply no substitute for seeing the whole picture. Only by having a workspace that allowed Einstein to post many thoughts, seemingly unrelated, was he able to begin to see exciting new connections, ideas and solutions.

The same is true in financial services when it comes to wealth management. There simply is no substitute for seeing the client's WHOLE picture. That is precisely the process we have developed, which we call WealthMapping. We don't use a blackboard, but the modern and common equivalent, a large easel pad. Like the physicist's blackboard, WealthMapping is a system to gather as much information about a client as possible in seven critical areas. Once this is achieved, the advisor has an unmatched ability to begin to see the affluent client's whole picture-to see their lives, perceive potential problems and then brainstorm financial product solutions to present to the client.

WealthMapping utilizes a schematic that allows an advisor to capture large amounts of information into predetermined categories on one large sheet of paper. The WealthMapping schematic can be seen in Figure 2.


Whole Client Memletic Large Image

Download PDF of Whole Client Memletic with Sample and Worksheet

At its heart, WealthMapping is a system. The process of learning WealthMapping, while intimidating at first glance, is deceptively simple. Can you learn to WealthMap your clients? Let me answer that with a question: Can you learn to ask six questions, following the M.A.P. system? The answer for most advisors we have coached is a resounding "Yes!" In essence, we have identified seven areas rich with wealth management information. The magic of these seven areas lies partly in the information to be found in each category, but predominantly in the linkages between these seven areas.

These seven areas and the corresponding macroquestion are the following:

1. Client Vitals: Who are we working with?

2. Financials: What do they own?

3. Personal Relationships: Who do they care about?

4. Goals & Concerns: What three things do they want to do in life?

5. Professional Relationships: Who do they work with?

6. Interests: What do they like?

7. Communication/Presentation: How do you communicate with them?

Putting The M.A.P. To Work
For advisors, the system of WealthMapping becomes quite easy once they get comfortable with these overarching seven questions and the process. After Client Vitals, we find advisors are best served by starting with financials because this is where they are likely to have the deepest client knowledge. The M.A.P. means:

Maximize Client Information: Using the macroquestion, gather as much information as possible and continue clockwise to the next category.

Analyze and Ascertain Follow-up Questions: Review your completed WealthMap. What questions jump out at you?

Provide Solutions to Client Problems: Call a strategic scenario session with your or your clients' professionals. Identify problems, develop solutions and discuss how they should be presented to the client.

Maximize Information
The starting point is Client Vitals. Here the advisor details key demographic information about the client including age, gender and net worth. On the WealthMap, Financials is placed in the upper right corner. The process is to gather as much information as possible in Financials, such as their investments, their home, their second and third homes, their businesses, other real estate, retirement plans, stock positions, life insurance and debts. When advisors have exhausted their knowledge here, they continue clockwise to the next category and question-Personal Relationships: Who do they care about? Advisors then repeat this step of maximizing the information they know, and continue this process one category at a time until they have filled in the map.

Analyze And Ascertain Follow-up Questions
The next step is to analyze the information and ask follow-up questions. Advisors will then need to review the information they gathered on the WealthMap. While it usually takes a little practice, advisors are soon able to follow up with a panoply of insightful questions. (Ashort list of potential follow-up questions and ideas is available from www.vankampen.com/consulting/wealthmapping.) When advisors reach this stage, they can see the client's whole picture. Sometimes they are obvious. Has the estate plan not been updated since their divorce, and the former spouse has recently become engaged? Check the age and beneficiary of the life insurance, as these are typically done at the same time. Sometimes a 1035 exchange of life insurance policies is suitable because doing so would provide the client better coverage, save them money and create the opportunity to change the beneficiary to someone appropriate. Sometimes the problems are less obvious. One client we worked with had the following issues in his map:

1) He didn't want to give his kids all his money and spoil them.

2) He had an impending sale of real estate for $2 million that he didn't want to go into his estate.

3) He was very active philanthropically, giving more than $350,000 each year to a handful of religious charities.

4) He wanted his kids to learn how to give to charity intelligently.


What's the wealth management solution that was embraced by this client? Create a donor-advised fund managed by the advisor and endowed with the sale of the real estate so that is never taxed. Work with the children to develop a "gifting policy" to provide guidance on the traits they will seek in a charity. When advisors see the whole picture, it becomes quite easy to identify these seemingly disparate solutions and link them together.

Provide Solutions To Client Problems

For the majority of advisors, the first and most important lesson to remember at this stage is to avoid jumping to conclusions about specific product or service solutions. In this framework, the advisor's primary responsibility is to identify the problems using the WealthMap. Then, and only then is it time to call a meeting with a team of experts to discuss the problems and collectively develop solutions. The advisor's greatest strength is knowing affluent clients and profiling them extensively. No one can be an expert on all of the different areas of wealth management; they are too extensive, and continually changing and evolving. The most successful wealth managers know their affluent clients and leverage the group's collective expertise for solutions.

What experts should be part of a wealth management team? Many of the most successful wealth managers have a member of their team that has credible expertise in each of the following areas:

  • Tax planning
  • Estate planning
  • Accounting
  • Life insurance
  • Credit
  • Derivatives

Where should the experts come from? One reason an advisor explores professional relationships is to determine what members of the team the client may already have in place. If the client has a CPA who he or she has used for 20 years, this is the person who needs to be brought into the loop very quickly. As a rule of thumb, when the client has an existing relationship, try to work with that professional whenever possible.

Much like the unexpected find of a multibillion barrel oil field on our country's doorstep in the Gulf of Mexico, you do not need a new client to profit from wealth management opportunities. Rather, you need the proper tools and a new focus to go after the buried treasure in your current book of business. The good news is you have the ability to make significant discoveries within your current business. In fact, let me share this stat with you: Advisors who committed themselves to this process increased their income 25% in the first year without adding a single new client. ansion, client profitability enhancement and new client acquisition, not to mention managing a business and servicing clients. Concierge providers can play an important role in helping advisors in their quest to set themselves apart from the competition, to have deeper and more insightful relationships with their clients, to deliver meaningful hospitality experiences and to send a constant message to their customer base that they are valued and appreciated.

Brett Van Bortel is an authority on advisory practice management and the head of Van Kampen's advisory consulting services division.