By Jason Glisczynski
In the vast world of financial advice, where over 300,000 registered advisors (and a boatload of insurance salespeople) navigate the tides of economic change, there stands a noteworthy shift. Wealthy individuals, amidst this ocean of generalists, are increasingly seeking the expertise of specialized private wealth advisors. Here’s why this trend is becoming more pronounced.
Understanding the Generalist Approach
Most financial advisors operate as generalists. They offer a broad range of services, catering to various financial needs for a massive group of consumers such as “pre-retirees and retirees.”
This approach works well for those in the early stages of wealth building or have amassed wealth ranging from $0 to about $1,000,000. However, as one’s financial situation grows in size and complexity, the generalist model often falls short in addressing specific needs. The reason this model fails is while the advisors “offer” the broad range of services, very few actually deliver on that offer, particularly to those with assets exceeding the $1 million mark.
I’m part of an industry leading and elite mastermind group of top advisors where we underwrite significant amounts of research to better understand and serve consumers. Our latest research shows there is a tremendous gap between the services desired, the services promised, and the actual service delivered. Note the blue boxes, what this tells you is that consumers are consistent with what they want, and financial pros are consistent in the way they market their services to meet the desires of the consumer, but the majority fall short of delivering said service.
The five main categories of wealth management are Investment Management, Tax Planning, Estate Planning, Wealth Protection Planning, and Charitable giving.
Of course it is no surprise that financial professionals are delivering (for the most part) on the investment management area. There is no shortage of financial people that will vehemently proclaim the investments you own suck, and theirs are better so you should move your money to their firm/product/strategy. What is very clear in the research, is that consumers want more from their advisor than investments.
While this data is new, gathered in 2023, the results are consistent with historical trends and previous studies we conducted. Proof positive that the financial industry is has been and continues to be really good at marketing services, but not so good at delivering.
This is evident when examining any number of financial pros websites where they position themselves as “holistic” or “comprehensive”, but later in the fine print they say something like this: “introduce us to your lawyer or your accountant, we’ll gladly work with them for your benefit.”
In my nearly 20 years of experience, that simply doesn’t work. Typically the lawyer or CPA is reluctant to engage with the financial pro because the industry trains the advisor to grow their business by gaining access to the CPAs clients and sell them more investments, a liability the CPA or lawyer doesn’t want to accept.
For professionals from different industries such as tax, legal, investment, insurance, and family governance to all get on the same page when they have previously never worked together is nearly impossible, hence why the data shows that less than 7% of financial professionals can actually deliver on the client’s desired services. Most financial pros are self-proclaimed wealth managers, but less than 7% deliver the goods, as this study shows:
The research goes deeper to determine more specifically the services desired by consumers and what the financial services industry delivers. Note the significant disparity between the services desired by consumers and the services delivered. The two that stick out the most to me are estate planning and tax planning. Think about your own situation for a moment. How often have you heard a financial professional say things like “you need to go talk to your lawyer about that” or “that is a great question for your accountant, go talk to him/her about that because I can’t give you tax advice.”
The data speaks for itself.
There are two methods for solving this problem, and they must be deployed congruently to have success.
The first is utilizing a family office, multi-family office, or virtual family office framework for conducting business.
The second is specialization.
To keep this (somewhat) brief, I’ll only cover the latter. For information on virtual family offices, you can visit https://silvertreeplan.com/your-virtual-family-office.
The Specialized Private Wealth Advisor: A Niche Expert
Wealthy individuals often face unique financial challenges and opportunities. Highly specialized private wealth advisors, like those focusing on the needs of manufacturing executives and owners, bring a tailored approach. This specialization is not just a preference but a necessity.
- Deep Industry Knowledge
A niche advisor has in-depth knowledge of a specific sector. For instance, in manufacturing, they understand the nuances of the industry, from operational risks to growth opportunities. This insight allows them to provide advice that resonates with their client’s unique circumstances.
- Customized Financial Strategies
Specialized advisors are skilled at developing strategies that align closely with their clients’ specific goals. Whether it’s smart investing, tax mitigation, or legacy planning, their advice goes beyond general recommendations, offering targeted solutions.
- A Focused Approach to Risk Management
Manufacturing executives, for example, face particular risks, from litigation to market fluctuations. A specialized advisor is adept at identifying and addressing these risks, providing peace of mind and security.
- Enhanced Personalized Service
With a deep understanding of their clients’ industries and personal goals, specialized advisors offer a level of service that generalists may find challenging to match. This personalized touch is not just about knowing the numbers; it’s about understanding the story behind them.
Why Wealthy Individuals Prefer Specialization
The preference for specialized advisors among wealthy individuals boils down to relevance and expertise. They seek advisors who not only understand the general landscape of wealth management but who can also delve into the intricacies of their particular situation with authority and insight.
The Future of Wealth Management
As the financial landscape becomes increasingly complex, the demand for specialized private wealth advisors is likely to grow. These professionals offer more than just financial advice; they provide tailored solutions that resonate with the unique needs and aspirations of their clients.
In conclusion, while the sea of financial advisors is vast, it’s the specialized private wealth advisors who are making waves. Their deep industry knowledge, customized strategies, focused risk management, and personalized service set them apart, making them the preferred choice for the wealthy who seek not just an advisor, but a partner in their financial journey.
Jason Glisczynski is co-owner and principal advisor for Silvertree, LLC. He is a CERTIFIED FINANCIAL PLANNER™ Professional and a Certified Private Wealth Advisor Professional, and specializes in working with business owners, executives, and workers in manufacturing.
Investment Advisory Services offered through Brookstone Capital Management (BCM) LLC, a Registered Investment Advisor. Silvertree, LLC and BCM are separate companies. Visit www.silvertreeplan.com for more information.