- 30 years of private client sales management with Barclays Wealth Americas and Lehman Brothers
- Managing Director of San Francisco/West Coast wealth management
- Head of Fixed Income Sales in Asia for Lehman Brothers
- All 7 Best Practices
- Pre-Meeting Discovery Process
- One-on-One Call with Expert
- Meeting Summary Report
- Post-Meeting Engagement
Building an Individual High-Net-Worth Franchise for Financial Services Firms
- Many companies are trending from commission-based to fee-based structures.
In the old days, traders made a straight commission on transactions. The name of the game was to maximize the number of transactions and each transaction was a visible sale that could be counted on a day-to-day basis. The industry is moving away from this commission-based model to a fee-based structure. In the fee-based model a sum of the client’s funds are invested in a balanced portfolio and a fee is charged based on a point system and paid out on a per annum basis. In the commission-based world, traders can easily track their trades and scratch their sales itch everyday. In the fee-based model, the itch doesn’t get scratched daily. The transition from the newer to the older model can be difficult and there is a whole generation of commission-based salespeople who are being moved to a fee-based model.
- The federal government and law-making bodies are examining financial service firms very carefully; firms want to hire employees with squeaky clean U4s.
Since the 2008 recession and its aftermath, government agencies and other bodies have become very conscientious about compliance in the financial services sector. Compliance departments in large firms don't want to hire anyone with a U4 violation. The problem is that the number of qualified, experienced brokers in the high-net-worth management field who survived the period from 2000 to 2008 with an absolutely clean record is relatively small. The heat is on and in a world where there are multiple avenues of casual communication (texts, e-mails, etc.) legal or ethical violations come easy. Even small lapses will not withstand scrutiny as close as it is today.
- Many high-net-worth individuals now are instantly wealthy; many clients are not the possessors of old, family money earned over generations, but have recently acquired wealth.
It's a different sale if you're calling on a Johnson & Johnson executive who over time has made over $30 million as compared with a young person in his or her 20s who just sold an app for $30 million. The ability of the sales rep to relate to the client and to understand the needs of these different client bases is a skill unto itself. More experienced professionals in the field know the markets well but may not know the client and his or her needs. For instance, a new millionaire with technology money may not respond to a slick salesperson who dresses “too Wall Street.” while the J&J executive appreciates what he views as “a professional demeanor.” Your high-net-worth franchise needs to be aware of the culture of a new generation of investors.
- Financial managers are seeking to leverage the distinction between passive and active management.
Some clients prefer an investment strategy that emphasizes relatively low risk, steady performance. This is a passive investment strategy. Others prefer a more active strategy where investors pursue whatever is new and hot. Active investors are often looking for the secret sauce, something they can discuss with their friends at a cocktail party. Experienced managers know the difference between passive and active investing and understand their client’s preferences.
- Many investors are opting for a do-it-yourself approach to managing their assets.
Many investors nowadays prefer to try a hand at managing their assets themselves. Young, instant millionaires may believe that managing their assets is as easy as selling the app that made them an overnight success. They are likely to resist the efforts of your best sales people, and they will tend to believe that they know better than seasoned professionals.