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Voices: Mindy Rosenthal, On Coordinating Wealth Advisers

Mindy Rosenthal helps run the Institute for Private Investors, a New York-based networking association for ultra-high-net-worth families.

A few years ago, prior to 2007, we conducted a study which showed that it was very common for ultra-affluent families to use a team of advisers to facilitate their wealth management. A primary adviser would be assigned the majority of the family’s wealth. Then they would hire three or four tertiary advisers who were charged with acting as a check on the primary and opening the client up to diversification and new opportunities.

Surprisingly, we found there was little coordination between these various professionals. Wealth managers, consultants, money managers, attorneys and accountants were all used singularly by the client; they had no communication with one another. In most cases, they didn’t know the other advisers existed because there was no central point of contact.

We looked back into the market this past year and found that close to 45% of those families were now using some kind of ‘quarterback’ to coordinate the efforts of their advising and wealth management teams.

For the most part, that development was client-driven. After the recent market correction, people of every class revisited their financial plans. But clients who had used a network of isolated advisers found that the process was a logistical nightmare. They had been wary of confiding too much information in one adviser, but now that information was too hard to find, missing or woefully out of date. The solution involved using a central figure as a point of contact — the so-called ‘quarterback.’

Single family offices that hire outside advisers to help serve clients already follow the quarterback model, which is generally the CEO. But larger firms, including private banks and multifamily offices, are starting to make the same move.

Because of this trend, there’s a greater sense of trust between clients and advisers, as well as between advisers and their fellow professionals. There’s a tacit understanding that even if they aren’t part of a distinct team, advisers and consultants working for the same client have to be willing to interact with each other. The improved communication has made it easier to understand exactly what the client is trying to achieve with their wealth and exactly how their financial team can help them do it.

For advisers, the development of professional coordination means a few things. First, clients are looking – more and more – for support in areas outside of asset allocation or risk diversification. And because no one person has a degree of expertise in every area of client services, it’s important for advisers to be open to seeking outside support. Granted, that can be a tough tightrope to walk. There is always the worry of losing a client to another adviser or the risk of a making a poor recommendation that ends up reflecting poorly on you.

Still, there is more to be gained than lost from collaborative relationships. So I recommend cultivating them. Use conferences to make contact with advisers who offer complementary services and reach out to your client’s accountants and attorneys. If you stick to your core competencies and form a team of trusted professionals that can serve the myriad needs of a family, you will be far more trusted by, and valuable to, your clients.