Wealth firms say key to job is seasoning

In an effort to bolster sagging client confidence, wealth management firms are placing a premium on experience when they hire financial advisers, seeking those with advanced degrees and broader skill sets.

What’s more, clients’ dissatisfaction with their advisers’ relationship skills is also likely to accelerate the use of team-based approaches in wealth management firms, industry observers say.

Wealth advisers have been criticized for lacking client relationship skills, a sophisticated understanding of risk and global experience, and for not being able to adjust to change quickly.

“The landscape has shifted. We’re all struggling with what we need to do to be relevant in the next up cycle,” said Doug Regan, president of Chicago-based Northern Trust Corp.’s wealth management group, which has $150 billion in assets under management.

“There are few firms that are as client-focused as they need to be. The high-net-worth clients are complaining and the chief executives [of wealth management firms] are reacting to that,” said Anthony Riotto, founding partner of Riotto Jones & Co. LLC, a New York executive search and consulting firm.

Seasoned advisers have become particularly desirable in the this environment, wealth management executives said.

“We like to have people with experience,” said David Lamere, chief executive of Bank of New York Mellon Wealth Management. “You can’t take a three-week course and serve a family with $30 million.”

Although Northern Trust is “not doing a lot of hiring” at present, it is “most interested in [candidates] with on-point client management experience from respected firms to bring a diversity of thought to the firm,” Mr. Regan said.

“More experienced advisers are more trusted, and that’s very important right now,” said Wallace Head, executive managing director and president of the private wealth group at The Private Bank in Chicago.

The more advisers can bring to the table the better, industry observers say.

“I think you’ll see a sea change,” said C. Steven Crosby, leader of the U.S. private banking and wealth management practice for New York-based PricewaterhouseCoopers LLP, which released its annual Global Private Banking and Wealth Management survey last month.

“There will be much greater demand for qualifications or credentials which are relevant to wealth management, such as an MBA, a law degree, being a certified financial analyst or knowing different languages. Anything that tracks to wealth management tends to resonate,” Mr. Crosby said.

Advanced degrees have become increasingly important for wealth managers, said Mr. Lamere, whose firm oversees about $132 billion in client assets.

“Advisers need to continually educate themselves, have expertise and be able to inform their clients and explain and give a sound rationale for a wide range of solutions,” he said.

To that point, this will lead to a team-based approach at wealth management firms, industry observers say.

“I think it definitely underscores the need for teams,” said Danny Sarch, founder of Leitner Sarch Consultants Ltd., a recruiting firm based in White Plains, N.Y.

“Wealthy clients’ needs have become so varied and specialized that you need different people who can specialize in different areas,” he said. “The notion that one person has all the necessary skills to serve the client is at best naïve.”

The trusted adviser is being replaced by an institution, Mr. Regan contended.

“This time last year, there was a real push toward the trusted- adviser role that emphasized one-stop shopping,” he said.

“Now we’re seeing a stronger move toward diversification and a more team-oriented approach,” Mr. Regan said. “I think we’re seeing a paradigm shift from the individual to the institution happening before our eyes.”

Despite increasing emphasis on client relationship skills, however, corporate search executives caution that wealth management firms remain sales-driven cultures.

“It’s still a numbers game. It’s all about size of assets under management,” said Michael Castine, chairman of asset and wealth management for Korn/Ferry International, a New York-based executive search firm.

Or, as Mr. Sarch put it: “If you have great client skills and can’t bring in business, you’re not seen to be worth as much. And if you can bring in business but don’t have such great skills, it tends to be overlooked. But that’s not different than any other type of sales organization.”

Wealth management executives acknowledge the problem, but say that they are trying to separate sales from service.

“There is a central dilemma created by compensation structure and performance evaluation that unduly weights asset-gathering and product distribution,” said Mr. Head, whose firm has more than $3 billion in assets under management.

The Private Bank is among a number of firms that have separated advice and discretionary-asset management from sales and product distribution, he said.

“The firms that make the separation clear are more likely to satisfy the expectations of more discriminating clients,” Mr. Head said.

Headhunters and industry executives are divided about the ability of the talent pool to meet increasingly complex client relationship demands.

“The talent is out there. I’ve never seen this kind of quality available for the right reasons,” Mr. Riotto said.

Mr. Regan said, however, that he was “surprised by the relative dearth of highly qualified candidates coming across my desk.”

“The task for the adviser who gets hired will be to answer detailed questions under pressure from wealthy clients who are doing their own research, Mr. Crosby said.

“People want a cool, steady hand on the tiller,” he said.

E-mail Charles Paikert at [email protected].

Related Topics: Wealth Management