Bowen, founder and CEO of CEG Worldwide, previously worked as a financial advisor and firm executive. He served successively as CEO of Reinhardt Werba Bowen Advisory Services and Assante Capital Management.

Getting the Right Help

Anyone who has read my columns should know that I believe wealth management is the winning business model in the battle for affluent investors' hearts, minds and assets. And CEG research tells me I'm right. On average, wealth managers work with 101 clients and earn $881,000 annually. By contrast, financial advisors who are not wealth managers earn just $279,000—and have to serve 269 clients to generate that income. The real question, then, is what are financial services firms doing to support the transition to wealth management? The answer, in many cases, is not enough.

Just take a look at the numbers. In 2007, a mere 6.6% of the 2,094 advisors we surveyed from across all industry channels (wirehouse brokers, independent broker-dealer reps and RIAs) were true wealth managers. The rest of the advisors, then, were operating within the traditional "investment generalist" model, one that values transactions more than long-term comprehensive financial planning.

Why such low numbers? One reason is that wealth management can be challenging to implement—you certainly can't do it all in a month, or even six months. Most advisors want help transitioning their businesses to wealth management (and many desperately need it) because there are so many moving pieces involved doing so. Unfortunately, we have found that while financial services firms are being helpful with some elements of this difficult transition, they are not getting it in many other key parts.

To facilitate an effective transition, you want to work with those firms that offer the right kind of support. As you move forward, it is crucial both to understand the kinds of help you need to implement wealth management, and to assess current and potential financial institutional partners in terms of their ability to provide them.

What Wealth Managers Want
From interviewing and working with some of the industry's top wealth managers, we have learned what they want and need in order to build and maintain great practices. They are looking for support in three major areas:

Marketing. Nearly all the wealth managers we surveyed—94.2%—said the financial institutions they work with must help them develop referrals from other advisors. In addition, an overwhelming majority—89.1%—said that getting advanced sales and marketing training was very important. Plenty of wealth managers also value assistance in learning how to form strategic alliances and learning more about potential target niche markets (both 68.1%).

Unfortunately, we also learned that many financial institutions aren't providing support in the right areas. For example, fewer than half of the 50 financial executives we interviewed in 2008 and 2009 believed that the four areas above were important to advisors. Instead, 74% said that "handout materials for clients" were important. The percentage of wealth managers who want help in this area: 0%.

Practice management. More than 90% of wealth managers today make it their priority to learn and implement best practices of leading advisors. Once again, however, too many financial institutions do not understand the importance of providing these best practices-only 64% said that it was very important to provide best practices to their advisory clients.

Instead, these firms' focus seems to be on providing advice on transitioning to a fee-based business (cited by 50% of survey participants). But none of the wealth managers want help in this area—and just 6% of non-wealth managers find this type of assistance very important to meeting their goals.

Technical assistance. A solid majority of wealth managers (64.5%) want training on advanced products. The good news is that most financial institutions (54%) understand that need. However, we again see disparities. While 60.9% of wealth managers want technical support on life insurance, just 22% of firms view providing such support as very important. Instead, the areas that firms do see as very important in terms of technical support include investment management proposals (70%), retirement distribution planning (60%) and retirement planning (60%). Unfortunately, hardly any of the wealth managers-fewer than 2% in all three cases-tell us that getting support in these areas is a priority.

If you're an advisor looking to transition into a wealth management practice, the takeaway from this research is clear: You need to make sure you are getting the help you need in the areas you need it. You also need to make sure that you are working with the firms that are focused on providing the types of assistance that will make a meaningful impact on your efforts. Do your current financial institutional partners (or those you are considering working with in the future) understand what being a true wealth manager is all about? And even further, do they offer the support necessary to help you create a successful wealth management operation?

The Right Partners
The best institutions out there possess a few key qualities:

• They lead for change. Top firms recognize that the market downturn broadsided everyone and that the fallout has resulted in many affluent investors questioning whether to make dramatic changes to their financial plans. As I've noted in the past, 81% of affluent investors last year said they planned to take money away from their current advisors. Just as top advisors are getting out in front of their clients more than ever, the top financial firms are acknowledging the realities of the current environment and letting advisors know they have plans to support them and rebuild their practices going forward.


• They deliver programs that provide immediate results. Most advisors give poor ratings to training programs that they attend either because they fail to provide usable information, the content does not directly apply to the practices of top advisors or because they are presented by people who do not know the material well enough.
  
  A firm's programs and support solutions should clearly present the best practices of top financial advisors and provide business strategies that are highly relevant to your business. These programs must deliver early results that energize and motivate you.


• They focus on long-term success. Although rapid impact is vital, you don't want to work with anyone who sells out long-term success for quick fixes that don't deliver sustainable results. To rebuild your practice, you will need to fully implement the best practices of top financial advisors. And the best way to do this is through ongoing coaching support. Advisors need both training and coaching to realize their full potential.


• They plan for your success. The support you receive from financial institutional partners needs to be part of a broader plan. In essence, you want to see that a firm you are working with has made a promise to help you achieve your goals in building a great practice while also serving your clients well. Top firms don't just launch and leave-they don't have a few training sessions and end the relationship. Instead, they stick with you and offer a multiyear commitment to your financial success-just as you work with your clients over time in order to help them achieve their goals.

That said, there is one thing that both financial institutions and wealth managers do agree on: Wealth management will be the dominant business model of the future. Indeed, 92% of financial executives believe that is the direction in which the industry is headed.

So what's all this mean? It means that you can expect these firms to look for new and better ways to help you transition your business to serve affluent investors in a comprehensive, collaborative and consultative manner. Your job is to evaluate these firms carefully and work with the ones that will give you the support and information you need to get you there.

Reprinted from: Financial Planning