7 Questions to Help Pivot Your Practice Towards Retirement

This is a summary of a session from the Money Management Institute’s Fall Solutions Conference that was held in October 2013 in New York City.

Moderator: Ron Fiske, Managing Director, Strategic Partnerships, Envestnet

Panelists:
Mary Deatherage, Managing Director, Wealth Management Advisor, Morgan Stanley
Samuel M. Kiefer, Director of Wealth Management, Partner, Risk Paradigm Group, LLC
Michael Lodes, Financial Advisor, Edward Jones

1. Do you need to pivot your practice towards retirement as your client base ages?

Deatherage, who was recently named to Barron’s Top 100 Women Financial Advisors, pointed out that the aging of investors will eventually affect the entire advisory industry.  The average Morgan Stanley client is 59 years old.  Retirement planning is an evolutionary process and advisors should be prepared to provide more customized planning services for their clients, she said.

Not only will the average client become older, but they will need more advice.  According to a survey by Lincoln Financial Group, 54% of affluent 70-year-olds found that controlling their finances throughout their lengthy retirement has proved to be more complicated than they envisioned.

The standard client meeting agenda at Risk Paradigm Group has changed from as recently as five years ago, Keifer explained.  The management of retirement income has become the top issue that clients want to discuss.  This runs parallel to traditional conversations about preservation, transfer and the gifting of capital, he noted.

In the past, it was common to base retirement planning on a 5.5% annual rate of return, Deatherage observed.  Recent studies have shown that an average return of as low as 2.8% should provide a decent probability of success (using Monte Carlo Analysis). However, in the current near 0% interest rate environment this could be tricky, she said. Continue reading

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Finding the Keys into Sponsor Platforms (1/2)

This is a summary of a session from the Money Management Institute’s 2012 Fall Solution Conference. This is part one of a two-part series.

Moderator: 

Bill Broderick, Principal, Investment Advisory, Edward Jones.  They launched their SMA program back in 1993 ($2.5 bil AUM), Mutual Fund Advisory (MFA) was launched 4 yrs ago and now has over $83 billion in assets, last year launched UMA ($1.2 billion AUM).  All programs are home office-driven with very limited investment lists.  There are no Rep as PM programs.  Research team consists of 20 analysts based in St. Louis, MO who build the fifty supported models.  All of their models are GIPS-compliant.

Panelists:

Steve Raimer, Partner, Director of Due Diligence, Lord Abbett & Co.  They are an independent money management firm based in Jersey City, NJ.  $127 billion in AUM.

Jeff Holland, Executive VP, Head of Capital Markets, Cole Real Estate Investments.  Cole has been in business over 30 years and has $12 billion in real assets.  They focus on long-term, high-quality,  income-producing real estate.  Jeff has been with the firm for two years and is the gatekeeper for their platform and is responsible for driving advisor adoption of new products.  Prior to Cole he was COO of Equity Trading at BlackRock.

Anthony Ciccarone, Managing Director, Head of National Accounts Business Development, Nuveen Investments.  Nuveen has around $210 billion in AUM.  Ciccarone has been at Nuveen since 2005 and in National Accounts for three years.  Prior to that he was in Nuveen’s Product Development Group for four years.

What is some initial advice for getting onto your platform?

Holland proposed that the industry is coalescing towards a 2×2 matrix; advisory vs commission and discretionary vs non-discretionary.  When moving into discretionary platforms and home office models there is a higher level of due diligence, he warned.  Does your firm have the rigor to get on these platforms?  Even in discretionary products, some firms require client approval before investing in alternatives such as REITs, he advised.

How can managers better position themselves versus their competition?

According to Raimer, there are three things that are critical for a manager: 1) know your products; 2) know the sponsor landscape; 3) know the competitive landscape.  Are you a better or complimentary solution?  Unless you are contacted as part of an active search by the sponsor, then being a complimentary solution is better.  A manager should be able to demonstrate to the analyst how they can improve their recommended list, he said.

For small managers, such as Coles, who are focusing on alternatives to the standard 40 Act funds, it can be more difficult, Holland described.  Coles has developed what they believe to be an innovative product, which is a managed account wrapper around commercial real estate.  When making the value proposition, you have to make analogies to existing products so they can understand how you fit into their platform.  A big challenge for innovative products can be just finding the right people to talk to at the sponsor, he said.

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Inside the Minds of Barron’s Top Financial Advisors

This is a summary of a panel from the Fiserv Client Conference Spring 2012, which was held in Las Vegas, NV.

Moderator:

Sterling Shea, Managing Director, Head of Advisory & Wealth Management Programs, Barron’s.

Panelists:

Ed Dollinger, Edward Jones, 26 years – manages $500 mm

Theresa Chicopolos, CFP, Wells Fargo, Scottsdale, AZ, 26 years – manages $1.16 bil in Ultra-HNW and Institutional assets, she was the #1 ranked advisor in Arizona in both 2010 and 2011.

John Waldron, CFP, Founder and CEO of Waldron Investments, $2.2 bil AUM, HNW individual and institutional clients, #1 ranked advisor in Pennsylvania.

What functions are you allocating more time to now than you did five years ago?

net new flow of money is concentrated in a small number of advisors, these advisors adapted their methods of communication and internal processes to the evolving consumer needs.

Chicopolos has been steadily reducing the number of client relationships over the past ten years in order to concentrate the firm’s focus on fewer while still increasing the overall AUM. 10 years ago, she had 3,500 clients and it was mostly transactional business. 5 years ago she was down to 280 clients, and today she has just 75. She spends more time now looking at her client’s entire balance sheet and making sure that they execute the plans as they are designed.

Waldron Investments is a consulting firm with 26 employees that has an independent asset management offering that integrates with the other seven financial disciplines. Five years ago they were mostly doing the same things as today, which is understanding the client’s entire balance sheet and implementing financial strategies. What has changed significantly is their client’s psyche, he said. More clients are doing due diligence on them than five years ago.

Previously, Dollinger’s firm focused more on portfolio construction, but now they’re focusing more on strengthening client relationships. Over the past five years they’ve been trying to reduce the number of client relationships and increase the amount of assets at the ones they have, he said.

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