Asset Management Firms Need a New Kind of Wealth Planning Specialist

By: mikeguth
Asset management firms require a new breed of strategist / Wealth Planning Specialist that combines the technical knowledge of a portfolio manager with the smooth-talking skills of a marketer. The primary function of this Wealth Planning Specialist is to provide financial intermediaries with the marketing services, tools, strategies, software, and technical and market knowledge they need to support their private banking, trust, and retail asset management programs.

The Wealth Planning Specialist will also be used for one-on-one calls with valued asset management clients (extremely high net worth (HNW) individuals and institutional clients) and act as one of the asset management division’s expert presenters at national/regional meetings, top-producer conferences, advanced training classes and other opportunities. To succeed in this role, the person needs to be someone to whom an audience of HNW clients and savvy institutional investors will listen. The person has to have something innovative and original to say, but he also needs to have the technical background to give credibility to his statements.

For example, Dr. Kurt Winkelmann has proposed a Liability-Adjusted Sharpe's Ratio that would seek to match the interest rate risk of a fund’s liabilities. His idea is to match liabilities, then try to get a good risk-adjusted return on top. I wonder if this concept would be difficult to apply to fund managers with extensive positions in derivatives that are changing daily. For example, one day the strategy is an iron butterfly, the next day it is an inverse strangle. The liability of a particular fund may be a moving target, so that the liability-adjusted Sharpe's Ratio is no sooner calculated than it becomes stale and outdated. The Wealth Planning Specialist needs to have a sufficient background in financial modeling to understand alternative measures of fund manager risk. People who are unfamiliar with Sharpe's Ratio probably have an inadequate technical background for this new type of position.

A second area of focus for this type of position will be to publish articles and participate in interviews on wealth planning topics in vertical trades, national consumer magazines, and certain daily and weekly newspapers. Essentially, the Wealth Planning Specialist would be the “go to” person for financial print and broadcast journalists seeking comment from an asset management representative on some news story. To me, this aspect of the job seems to be so much fun that the incumbent out to pay his employer for the privilege of being the focal point for news stories on asset management.

A third area of focus may be to assist the Asset Management firm’s marketing team in creating content for literature including white papers, and perhaps a list of top ten seminar topics or presentations that are most desired by the clients. The chance for the Wealth Planning Specialist to collaborate with other members of the marketing and communications staff seems very appealing. No one person knows every aspect of a business. Combining insights from multiple professionals with differing educational and professional backgrounds may uncover new topics for seminars or other presentation ideas. Based on past interests of HNW clients and financial intermediaries these seminar topics might include

· Practice Management (e.g. attracting and retaining HNW clients)
· Estate Planning Strategies
· HNW Prospecting and Psychology
· Philanthropy in Estate Planning and Wealth Transfer
· Tax Issues for HNW investors
· Trusts, Insurance and Wealth Transfer

The Wealth Planning Specialist is expected to help build credibility with bank, broker/dealer and sub-advised clients in positioning his asset management employer as a valuable wealth planning resource. To meet this expectation, the Wealth Planning Specialist should get out on the road and go on a “listening tour” to hear what clients and financial intermediaries consider the most important issues for asset management. Once the incumbent gets settled into this position, he (or she) will probably find that he spends about 50% of his time on travel: attending sales meetings, answering questions from clients, delivering presentations, etc.

One of the best articles describing this new type of Wealth Planning Specialist position appeared in April 30, 2007, issue of the magazine PENSIONS AND INVESTMENTS. The article, written by Raquel Pichardo, was captioned " 'Solutions' spur other problems; Tough to find strategists with broad knowledge, good 'bedside manners.' " The article describes how asset management firms are seeking people with the breadth of knoweldge to propose solutions to issues such as liability-driven asset management, obtaining more alpha returns, and tax planning, but still have the bedside manner or charm of a good marketer. Fund management clients don't want to be bored talking to theorists and technicians about investment ideas. The Pichardo article expresses it this way: the Wealth Planning Specialist ``doesn't have the Coke-bottle glasses and has to be very articulate in front of clients.''

Offering advice or solutions to clients is distinct from trying to sell products to the clients. Yet in reality, the two distinct business activities can yield the same result. But the Wealth Planning Specialists are considered to be salespeople or to have sales jobs.

BNP has set up a wealth planning group that is designed to build relationships with existing and potential clients. ``We are not here pitching products, this is a solutions-world, not a products world,'' according to the BNP head of pensions. BNP hopes that indirectly those new solution-oriented relationships would result in future transactions with BNP.

Michael A. S. Guth, Ph.D., J.D., is a financial trainer and former investment banker. For Deutsche Bank Asset Management, he attended marketing calls with fund managers and other bank representatives and answered technical questions on algorithms for tracking a stock index. For Credit Suisse, he was called to attend impromptu meetings with visiting institutional and corporate clients and discuss with them, e.g., ways of managing foreign exchange risk or certain undervalued assets that the trading floor observed in the market.