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When it comes to teamwork, top financial advisers are finding that two heads – or several – are better than one. Fewer than 15 per cent of the FT 400 advisers are solo practitioners. The rest work in teams, either vertical (with a lead adviser guiding other client-facing professionals) or horizontal (with several equal partners).
These wealth managers say the team structure allows them to specialise in the areas they know best and exploit resources for maximum efficiency.
Mike Klein, an FT 400 adviser with Robert W Baird in Milwaukee, Wisconsin, leads a team of 21 people. His group, which has been working together since the 1990s, serves very wealthy individuals with an average account of $30m. It also works with institutions. Each account is assigned a portfolio manager, a relationship manager and a service manager. “We look at clients and try to match their needs and personality with the right combination of team members,” says Mr Klein.
The team’s size allows quality service even during peak demand, Mr Klein says. Over the years, the group has added expert advisers who can cater to specific needs. One, a former corporate executive, is a good fit for small business owners. Another is a tax expert who used to work at Arthur Andersen and is just right for “accounting-minded” clients such as chief financial officers. The team also includes a lawyer who specialises in trust and estate work. All this experience, says Mr Klein, “means a broader base of services for our clients, lower error rates and higher quality of the overall product”.
Large brokerages increasingly encourage their advisers to work in teams. For example, Merrill Lynch recently revamped its adviser training, placing rookies with established teams. Part of the rationale is to address what some industry observers say is a succession crisis at the big firms – an impending exodus of older, experienced advisers who may not have groomed a younger partner to take over.
But Sharon Oberlander, an FT 400 Merrill Lynch adviser who leads a team of six in Chicago, thinks adviser teamwork has evolved in response to a changing industry. Giving financial advice has become more complex. With ever more asset management choices, and a multitude of client goals, including legacy and philanthropic planning, “one person couldn’t possibly deliver it all”, Ms Oberlander says.
In surveys, Merrill’s clients report that adviser teams offer better performance and service. “Clients get their questions answered promptly,” says Ms Oberlander. And greater client satisfaction means higher retention rates. For the advisers themselves, she says, the team structure offers flexibility and better work-life balance.
Rather than assigning a single relationship manager to each client, Ms Oberlander’s group collaborates on accounts, with all six advisers working together.
They document client conversations and update one another at weekly meetings. “Clients like being served by a group where they are known – where their goals and all their family information are shared across the team,” Ms Oberlander says.
A private banker from Bank of America, Merrill’s parent company, is pulled in so often to help clients with mortgage and other lending needs that Ms Oberlander considers her a virtual team member.
Of course, teams need not be large. David Kron, an FT 400 adviser with Wells Fargo Advisors who works with another principal, a financial consultant and two sales assistants in Philadelphia, offers comprehensive planning to clients consisting mostly of professionals, many of whom have inherited wealth. Mr Kron hands day-to-day portfolio management to his financial consultant so that he and his partner can focus on big-picture planning. He works with clients’ lawyers and accountants as necessary.
Mr Kron and his partner have considered adding people, but he says: “The more employees you have, the more you have to manage them.” Indeed, even advisers in large teams say there is a point – though it is hard to pinpoint exactly – beyond which a team becomes more like a small company, needing its own management structure.
Still, industry experts see a trend toward larger teams. More than 10 per cent of this year’s FT 400 advisers work in teams of 10 or more client-facing professionals. “This is a trend driven by advisers,” says Rudy Adolf, chief executive of Focus Financial Partners, a partnership of independent registered investment advisers with offices in New York and San Francisco. “They know like-minded colleagues in the same location and say: ‘If we team up and share our resources and experience, we can ultimately provide better advice to clients.’”
A billion- or multibillion-dollar team, Mr Adolf says, has the marketing cachet to position itself in front of high net worth and ultra-high net worth clients.
Finally, Mr Adolf says, large teams are better equipped to leave a big brokerage and set up an independent firm if they wish. Many do not, of course, but it is one more way in which teamwork can add flexibility and growth potential to an adviser’s practice.