How Holistic Advisors are Stealing Clients

By Cynthia Stephens, VP of Marketing, ByAllAccounts on Tuesday, August 28th, 2012

High-net-worth investors crave truly comprehensive wealth preservation advice. Wealth managers that can deliver on their 360-degree promises have the keys to become billion-dollar firms in the near future.

Offer prospective clients the choice between an advisor who’s content to stick to the discretionary assets and a rival who offers input on every aspect of their finances, and the “holistic” advisor wins by an overwhelming margin.

The logic isn’t hard to understand. What wealthy family wouldn't put their trust in the advisor who can confidently weigh in on all the accounts, especially if everything else -- expertise, character, credentials -- is relatively equal?

Unfortunately, there aren’t many concrete examples of how full-spectrum advisors can put their “holistic” approach to work preserving clients' wealth, retaining the accounts themselves and maybe even winning new ones through referrals.

To provide some guidance, I spent some time talking about best practices with Don Hertling at Heller Wealth Advisors.

Don’s a true believer in technology in general, but loves account aggregation in particular as a way to demonstrate that the firm is dedicated to the best client outcomes possible.

As it is, Heller only switched to an RIA model in April but has about $300 million in client assets.

The firm explicitly markets as holistic wealth managers who not only handle the usual advisory services -- financial planning, investment management and wealth preservation and transfer -- but also keep an eye on assets held in employer-sponsored accounts, IRAs and even those nominally managed by competitors.

“We can include 401(k)s within our allocations that may include stocks, bonds, alternatives, commodities, and real estate,” Don Hertling explains.

“A lot of our clients have a relationship with a UBS person, for example. We can turn around and keep track of what the UBS person is doing on top of what we’re doing to make sure there’s no overlap.”

The goal here is to establish Heller as the “gate keeper” for all of the client’s holdings, so if there’s a question or concern, their number is the first one investors call and the first website they check.

That’s an obvious competitive high ground that Hertling and his two partners work to exploit throughout their meetings with clients.

“We achieve it by not just focusing on investments but also focusing on every other area of the client’s financial life,” he says.

“When we’re meeting with clients now we’ll tell them ‘If you want us to keep your 401(k) within your managed portfolio, we can do that.’ For new clients we have no problem linking accounts to their portfolio reports so they can have everything together. Everything is included and in one spot. 90% of our clients love it and think it’s great.”

Don’s day starts at 7 a.m. downloading and reconciling overnight performance data from custodian Schwab as well as client 529 accounts and aggregated third-party data.

A better competitor and more efficient as well

In the interest of full disclosure, Heller receives aggregated financial account data from ByAllAccounts, but the overall rationale here would apply even if the firm were not using outsourcing its aggregation needs.

Don also wears the chief compliance officer hat, so he’s keenly aware of what the SEC demands when it comes to client communications, monitoring employee trading and keeping an eye on rivals’ fees in the interest of transparency.

The aggregation of financial account data makes it possible for him to handle all those tasks and be ready to meet with clients by the time his partners get into the office.

In the process, aggregation lets him peek on what Heller clients are paying out in fees to other advisors, and not just what’s in their portfolios.

“We see significant opportunities in the 401(k) business due to the new department of labor rules regarding fees,” he points out. “Everyone is forced to tell the participant what they’re paying. If you didn’t care about this previously you are going to care now.”

Keeping an eye on the competition also gives Heller the ability to lay out its fees against what prospects are currently paying -- an especially compelling argument when they compound the drag of that fee spread over the long term.

And the comparison includes what it costs to have Heller manage the held-away assets. Clients are aware of the cost here -- part of their overall asset management fee -- and Don says none are balking at paying it.

With all these competitive levers under their control, the Heller team is optimistic about their “holistic” power to double or even triple their AUM in the foreseeable future.

“We want to get to at least $750 million or $1 billion because at that point you’re of a size and scale where people aren’t worried about succession or that you’re a small firm,” Don tells me.

As it is, the firm is pursuing multiple merger opportunities in order to bolt on the assets. And it has the luxury to be choosy where new accounts are concerned.

“At this point we’re saying no to people with under $2 million,” Don says.

You Might Also Be Interested In:

comments powered by Disqus