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William Byrnes (Texas A&M) tax & compliance articles

Winning Strategies of the Holistic Wealth Management Service Model

Posted by William Byrnes on July 28, 2009


In my blogticle of July 19th I addressed Wealth Manager Skills Sets Required To Service New-Breed HNWIs.  Hereunder I turn to the successful strategies employed by wealth management firms to acquire and retain HNWIs and families.

My forecast for an expanding and robust sector the past years has not been drawn from the conclusion of “what doesn’t kill you makes you stronger”, though I often lecture that “the survivors shall inherit the spoils”.  Rather, I have examined the upward trend in expenditures by firms, and the sector as a whole, that allows them to the flexibility to adapt to changing climates and to evolve distinguishing services, such as the “well rounded, trusted advisors” trend required by new-breed HNWIs.

By example, for ten years I have measured that growing firms increase investment in education and information, and an increase in these two areas support that firm’s growth.  On the other hand, firms’ declining revenues, by example through loss of clients and key staff, correlate to a reduction in education and information spending.  In the 2008 poll by Robert Half’s Accountemps of 1,000 top companies, 94% offered tuition benefits to their key employees.  Naturally, this correlation begs the causation question of whether the decline in spending caused decline of revenues, the other way around, or some other factor caused both.

In support of the winners investing in education that supports a holistic service model approach, this past year Cap Gemeni reported that “While most HNWIs and UHNWIs have relationships with multiple wealth management firms, many clients seek long-term “trusted advisors” who can help them navigate complex topics and strategies.”  The trusted advisor must understand the HNWI “in the context of a larger relationship that encompasses personal and family finances as well as business partnerships or estate planning.” 

Most importantly for the employing firms of wealth managers, the Oliver Wyman study reinforced what is already generally known in the wealth management / private banking industry: the lifetime contribution value of an average private client under the European onshore model (the Advisory model) is three to four times than that earned from the US Broker/ Dealer model, while the European offshore client model – five times![1] 

The new breed HNWI will pay an asset under management (AUM) based fee for the trusted advisors holistic service, but prefers that the wealth manager employ this model dually with performance based fees – lowering the AUM fee but allowing a high blue sky for meeting and exceeding performance objectives.

Winner Wealth Managers

My wealth manager blog audience will not find the “trusted advisor” concept unique, and neither the family office that has gained so much attention amongst training companies the last seven years, as the “new” path forward.  This is the way that the most successful wealth managers members’ firms have always provided service to their clients.  Competency to offer these services has been assessed via the Walter H. & Dorothy B. Diamond Masters and Doctoral programs, or other professional association examination, such as that of the Chartered Wealth Manager of the American Academy of Financial Management (www.aafm.us).

Also, and more dear to many of my students, Cap Gemeni reported in 2008 that employing qualified talent will sharply increase because of the retirement of the baby boomer wealth manager generation.  “Bidding wars among firms for top advisors are not uncommon” and that packages will include “bonuses equaling two or three times the payouts from just a few years ago.”  As noted earlier in my blogticles, the industry career newsletter, Jobs in the Money, reports that credentialed professionals with certifications earn over 30% more than their colleagues.  Also referring to recent reports from recruiters, financial planner salaries are holding a steady range of $150,000 – $400,000.[2]  Based on my survey of recruiters and reports up to July 15, 2009, and our own alumni in the marketplace, this trend has held stable.

I look forward to addressing any comments hereunder.  Prof. William Byrnes, Walter H. & Dorothy B. Diamond International Tax & Financial Services Programs (www.llmprogram.org)


[1] The Future of Private Banking: A Wealth of Opportunity?, Oliver Wyman (2008) at 18.

[2] Headhunter Boils Business Down to Wealth Management San Diego Business Journal March, 23, 2009 at 17.

Acknowledgment of Resources

Though not attached via a citation to a specific fact or thought, the below resources nonetheless were studied in connection with the preparation of this presentation today, and may provide valuable reference for blog readers wanting more information.

 IBIS World Industry Report on Central Banking in the US, January 27 2009.

 IBIS World Industry Report on Investment Banking & Securities Dealing in the US, December 8, 2008 including recession update of January 5, 2009.

 IBIS World Industry Report Commercial Banking in the US, December 4, 2008 including recession update of Jan 9, 2009.

 IBIS World Recession Briefing: Economic Crisis: When will it End?, Dr. Richard J. Buczynski and Michael Bright, March 12, 2009.

 S&P Industry Survey: Banking, Erik Oja, Dec 11, 2008.

One Response to “Winning Strategies of the Holistic Wealth Management Service Model”

  1. […] International Trust & Company Laws, Analysis, and Tax Planning « Winning Strategies of the Holistic Wealth Management Service Model […]

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