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Building the Business 101: How Other Planners Serve Clients

Advisors' client-service models vary widely and tend to reflect the philosophy and ideals of those who lead the firm.

Veena A. Kutler and Annette F. Simon, 09/27/2007

This monthly series of articles describe the many steps and occasional missteps we have taken in building our financial advisory business, Garnet Group LLC. Currently, Garnet has eight staff members, more than 90 clients, $300 million in client net worth under advisement, and offices in Bethesda, Md., and Boston. Veena Kutler, CFA, and Annette Simon, CFP, are the principals managing the Garnet office in Bethesda.

In last month's column, we discussed our client-service model and the differences between our approach in the Bethesda Garnet office and that of our colleagues in the Boston office. In the Bethesda office, the two of us meet jointly with clients and use a functional, team-based approach to handle client service. It permits us to work on a flexible work schedule since any client call can be fielded by either one of us. Moreover, we find that dividing client responsibility along functional lines makes the most of our individual expertise and provides an added benefit to our clients.

We asked other advisors to share their client-service methodologies with us and received a number of thoughtful and interesting responses.

Relationship Manager Models
As we expected, several advisors wrote to explain that their client-service model is very different from ours. Owen Malcolm, vice president and CFO of Sanders Financial Management in Norcross, Ga., explained their interpretation of the team approach:

"We have three "relationship managers" in the office. The advantage is that there are clear expectations about the client's main point of contact. As a firm like ours grows, it's also helpful for us to know where we need to focus--knowing that we can't be intimately involved in every detail of every client's life. Call it the "divide and conquer" approach, if you will. I think it is a logical, efficient approach to practice management. It's helped us grow immensely and legitimizes our approach as a multi-professional firm."

J. Patrick Collins Jr, a principal with Greenspring Wealth Management in Towson, Md., shared his reasons for choosing the relationship manager model over the team approach. Although originally the plan was to have a collaborative multiadvisor approach, he told us that they decided to implement a single-point of contact relationship for three reasons.

"1. Scalability: We felt like having one primary point of contact at the firm was a much more scalable model than having multiple advisors working with a client. While the client still has access to all the firm's resources and expertise, it would be coordinated through one person.

2. Delivery: We believe that one person responsible for delivering the firm's service model (at least the professional side of it) was more realistic than multiple advisors and would result in fewer errors.

3. Personality: Our Advisory Board (a group of clients and outside professionals) did not like the idea of having multiple advisors working with a client. They unanimously said that the advisor-client relationship is so personal, that they felt like it was best executed in a one-on-one fashion and would be uncomfortable if they were "sent to" Jim for tax advice, and Bob for portfolio management, etc. They wanted one person coordinating this for them. We hadn't thought about this initially but believed it was good insight on their part.

Our firm now implements a "relationship manager" position, so each client has a primary contact. While other advisors/professionals may collaborate on the client's behalf, it is all delivered through the relationship manager."

Bob Wacker, president of R. E. Wacker Associates, Inc. in San Luis Obispo, Calif., uses a similar relationship manager approach as well, blending it with specialized areas of expertise within the team and using their CRM to keep the entire team up to date on all aspects of a client's situation:

"Our firm has six planners, five of which are CFPs. All clients are clients of the firm, but each client has a "responsible advisor"--that planner that is responsible to make sure all the right things get done in a timely manner for that client. Most client meetings, though, will have two planners in on them, and different members of the team have responsibilities for different disciplines. One will review estate plans, one will review tax returns and run tax projections, etc.

Our investment process is standard, each client has an Investment Policy Statement, and we have a dedicated trader who makes almost all trades according to our model portfolios using a decision-making matrix and the idiosyncratic exceptions (low basis stock, e.g.) to that client's portfolio. We have about $450MM AUM. Our account administrator handles all applications, transfers, withdrawals, etc., and our administrative assistant keeps track of the progress of all initial and annual reviews, which we discuss at bi-weekly staff meetings. Everything is recorded in Goldmine, our CRM, so someone else can pick up an issue if a planner is gone (temporarily or permanently). Clients know they have a primary contact, but they also know they have the services of the team, and they will normally relate to many people at the firm. We think this is a benefit for them and for us... if we ever want to get away."

The Wacker Associates model is very similar to what of Ron Rhoades, director of Research and CCO with Joseph Capital Management in Hernando, Fla. Ron explains:

"In our firm, we have four advisers and four support team members who directly interact with clients.

For each client, we have two advisers assigned--one primary who handles most contact with the client, and the other "secondary" who assists and who attends formal review conferences with the client (both planners attend). The primary purpose of this is to provide continuity for the firm. If any adviser ever departs the firm, the client has an ongoing relationship with another adviser.

Additionally, a financial services coordinator (assistant) is assigned to each client. These assistants also have a lot of contact with the client, and attend most client meetings. Our firm is likely to have more assistants than advisers, as we grow.

Using our client relationship management software (ProTracker), records are kept of all communications, and documents are scanned in and easy to access. Hence, we are able to cover for each other while attending conferences or otherwise out of the office."

While the relationship manager model seems to offer clear advantages in scalability and may allow for more intimate client relationships, Owen Malcolm articulated what may be the biggest possible disadvantage of this approach:

"The only potential drawback is clients may start to see their relationship with that particular relationship manager, rather than the firm as a whole."

Ensemble/Team-Service Models
Other readers wrote in to say that their client-service model is quite similar to ours. Andrew Tignanelli, president of The Financial Consulate in Lutherville, Md., writes:

"My firm uses a multi advisor team approach. Any client can be handled by any advisor in the firm at all times. In addition we treat our operations people as information planners and the client works with them also. This team approach promotes the firm and not the planners. It also provides a broader knowledge base to the situation. We call our approach Many Touches."

Likewise, Lauren Lindsay of Personal Financial Advisors in Covington, La., writes:

"I work with Bob Reed as a team with the rest of our support staff, currently just two, but sometimes we also have an intern. I handle the financial planning issues and he handles investment management. Prior to a client meeting, I prepare an agenda of things we need to review, which includes portfolio structure, etc. and we use that to handle the meeting. After, I prepare the client meeting summary and MoneyGuidePro. If possible, we try to get the updated numbers before the meeting and review MoneyGuidePro as part of the meeting but that does not always happen. Since we are doing the parts of planning we each enjoy, it works well!"

And Joel Shaps, president of Bedrock Capital Management in Los Altos, Calif., describes his firm's reasons for choosing a team approach:

"We have taken the ensemble approach to asset management and financial planning. Although each professional in the firm has an area of responsibility (our titles include chief investment officer, operations and client-service manager, financial planning associate and CEO/president), when a client calls they know whichever one of us they reach will address their questions and take action to get them the answers they are looking for from Bedrock.

Although we don't always succeed, our goal is to exceed our clients' expectation whenever they have contact with anyone at our firm."

Focusing on Inside/Outside Responsibilities
To close the loop on this topic, Veena interviewed Jeff Daniher of Ritter Daniher Financial Advisory in Cincinnati. The firm was founded in 1999 by Jeff and his partner, John Ritter. They currently have more than 100 clients and assets under management of $110 million. Jeff and John employ an interesting client service model that doesn't quite fit either the ensemble approach we use, or the relationship manager model as described by other advisors in our survey.  PAGEBREAK

Early on, the two partners met with each client jointly although they did not divide their responsibilities by function as we do in our practice. Both of them were fully involved in all aspects of the clients' financial planning and investments. Initially, they believed their clients benefited from having two sets of eyes on every issue. However, in time this created redundancies and inefficiencies within their business. Over a couple of years, John and Jeff evolved toward what they call the "least risk/discomfort rule." This meant that whenever they disagreed on a client issue or a new idea, the default position was to go with the most conservative of the recommendations or options.

More recently, with the addition of a third advisor, they have restructured their service model again. Jeff now devotes most of his time to working with clients and prospective clients, while John works almost exclusively on managing the business. Ronda, their advisor colleague, splits her time between client work and business/administrative tasks. Jeff is the primary relationship manager for all clients; John and Ronda provide back-up service when Jeff is unavailable for any reason.

Their plan was put to the test earlier this year when a family emergency took Jeff out of the office for three weeks. John and Ronda stepped in smoothly, and client-service responsibilities were met. With the growth in the number of clients, the partners realized they needed more hands on deck--in particular to provide support to Jeff. To address this need, they recently hired a new college graduate with some academic experience in financial planning and an interest in becoming a CFP. The new hire, Ashley, will help Jeff with data entry and trading activities.

As usual in our profession, there are a wide range of ideas about what is the best way to provide client service in a financial advisory firm. Ultimately, the decision comes down to the values and goals of the owners of the firm holds most dear--whether the decision is made purposefully or a model just gradually evolves, it tends to reflect the philosophy and ideals of those at the top. We don't think there is one right way (not even ours!) but always enjoy hearing how other successful advisors think and tackle issues. Every time we hear from our readers, we pick up tips we can apply to our business in the future.

Next month, we will discuss the work we have done counseling the young adult members of clients' families. As planners are serving their clients more holistically and working with entire families, counseling the next generation will play an important role.

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