How to win in wealth management

The rules of wealth management have changed post-crash. David Patchen, Senior Vice President of Private Client Group Education and Practice Management at Raymond James, has some top tips for managers to up their game

Wealth management is experiencing somewhat of a revival since the sector clammed up during the 2008 crash, which saw assets under management (AUM) contract by a staggering 20% in Europe and Asia. Some firms are now seeing unprecedented AUM, and research by consultancy firm Strategy& suggests that prospects for wealth managers have drastically improved in the past 12 months.

But it would be foolish to think that wealth managers can sit back and rest on their laurels. 

David Patchen, Senior Vice President of Private Client Group Education and Practice Management at Raymond James, who last month spoke at a CISI CPD event, 'Words mean things', insists that ‘complexity’ is the key word for wealth managers to remember when navigating this post-crash but mid-recovery terrain. “Complexity is a macro trend,” he says. “It’s growing exponentially. Developments in regulation, markets, products, people’s lives, information, geopolitical events – if you start stirring all that up in a pot, you start to see how complex things have become.” 

There are new rules to be aware of, says Patchen, who has some top tips for how wealth managers can stay on top of the new rules of the game.

1. Take a holistic approach“Best practice for meeting clients’ requirements is about doing more than money management,” says Patchen. “It’s about taking a holistic approach that is custom-tailored to each client’s individual life.”

The focus should not be on selling a product – which surely goes for most finance sectors – or even just having a robust asset management strategy. Breaking down what he means by a ‘holistic’ and ‘custom-tailored’ approach, Patchen enthuses: “There’s a life-planning component to management, a wealth preservation component, an inter-generational wealth component, a transfer component, a relationship management component… the list goes on.”

2. Identify and clarify your investors’ problems (because they often don’t/can’t)“I believe that today, ‘clarity’ is the key word for wealth managers to remember,” says Patchen. “A lot of investors don’t realise that they lack clarity about their needs.” 

As a result of all the variables in the components that make up wealth management now, Patchen explains that in most cases, “Investors aren’t even aware of their problem. They don’t know what they need.

“We, as people who are purveyors of wares and advice, are no longer the problem solvers we once were because problem solving implies that the investor has the self-diagnostic skills to identify their problems, and in today’s environment, with all of its complexities, that’s not what’s happening,” he says.

3. Capitalise on the opportunities of social media“In the States, what we’ve found is that grandparents, usually grandmothers, are using Facebook because their children are scattered around the US, or in many cases the world, and that’s an easy way to keep in touch,” explains Patchen. 

“When you have a review meeting with that client, you can start with some questions about what’s up with their family because you’ve had that insight by being ‘friends’ with them on Facebook.” 

For Patchen, that’s invaluable. “If you can use it to develop some warmth, social media can break down that level of suspicion and distrust.” And that makes room for the questions that wealth managers need to ask to serve their clients effectively.

4. Keep things simple“You’ve got to keep things simple,” says Patchen. “For our most successful wealth managers, that’s exactly the nut they have cracked, being able to give that clarity to their clients in the simplest terms.”

Simplicity is a theme that underlies some of the other guidelines Patchen offers. Being genuine and sincere, and delving a little deeper into the crux of a client’s investment goal are the name of the game in 2015 wealth management.

The original version of this article was published in the June 2015 print edition of the Review.
Published: 21 Jul 2015
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