Here is a summary of some of the main points covered during the third and final session of the Family Wealth Report Summit in March.

For the third and final panel of the Family Wealth Report Summit in March, panelists assembled in New York City to discuss: Polishing Up Your Value Proposition: The Importance of Prospecting and Marketing in Securing New Clients and Referrals. See the write-ups of panel one and two here and here.

Bruce Weatherill, chief executive at Weatherill Consulting and chairman of ClearView Financial media, publisher of Family Wealth Report, chaired the panel, which also consisted of: Andrew Fielding, director at Dominion Fiduciary Trust; Evan Jehle, partner at Flynn Family Office; Chris Trokey, managing director at GenSpring Family Offices; and David Winslow, director at McGladrey Wealth Management.

The first question thrown to the panelists from Weatherill was focused on the factors that affect the buying decisions of high net worth individuals.

What has historically been perceived as a broad focus on investment advisory services has “moved down the chain” when it comes to making wealth management-related decisions, said Winslow of McGladrey. “In the 1990s and early 2000s, everything was scored much more on metrics around returns and mitigating risk, but that to me has been diminished,” he said. “In the past, if we were to sit down and write a family constitution, it was more about family dynamics and governance, but now there are all these other issues related to protecting assets and personal security – things we barely spoke about five or so years ago.”

Weatherill noted that the investment “pillar” of wealth management has, for obvious reasons, always been at the heart of a value proposition, and that it is when that is established and verified by clients that they then turn their gaze to what is often cited as the “softer” elements – like family dynamics and governance.

As Fielding pointed out, the rigorous process involved in taking on a new client requires an intense level of due diligence and a building of trust. “Once you’ve gone through that hurdle, I don’t think clients are moving to other advisors based on investment performance,” he said. “Clearly, it is going to be a factor, but I think it is a decision that is based more around trust and service.” Similarly, Winslow noted that it is the subtler things that, combined, make a real difference, such as having calls returned in a timely manner and delivering finished projects on time.

Polishing it up

April Rudin, a delegate and CEO and founder of The Rudin Group, mentioned that many new wealth inheritors end up changing their advisors and so firms “may need to repackage their value proposition [to target them].” An element of this that is often ignored, according to Weatherill, is that while the industry pays a lot of attention to issues related to inter-generational wealth transfer, perhaps what should be more widely recognized are issues pertaining to intra-generational shifts – between spouses, for example.

But when it does come to interacting with the second or third generation, Winslow said it very much boils down to what the family's values are, rather than an advisor's service model. “It’s unrealistic to expect all family members to prioritize those values in the same way,” he said.

A value proposition should therefore be crafted around these values, and, crucially, added Jehle, reinforced by a team that shows they truly care about serving clients. “That is your service model,” he said. “It’s important that staff have the ‘caring gene’.” Branding and marketing are equally as important because “how are they going to know that you exist if you don’t have a brand?” he said, adding that thought leadership is a big part of this. “If you’re out there and speaking, writing articles with content that interests them [clients], then they will want to speak to you.”

Tech in the limelight

On a more practical level, Trokey said GenSpring has more mandates today that begin around integrated reporting, as simplifying clients’ lives “is one of the greatest value propositions we can provide.” Winslow said McGladrey has recently invested a lot in reporting and data aggregation – one of the big lessons from 2008/2009 having been that investors simply didn't understand the level of risk they had because of how varied their custody relationships or managers were. “I view data aggregation and reporting less about being able to provide some sort of dashboard or online access,” he said. “Of course, we’re looking for the tax efficiency aspects etc., but, at the heart of it, what families want is control – and information is the only way to get control over the relationships they have.”

On the robo-advisor issue, Winslow described this an “immaterial point” because it is based on too many generalities. But of course, there is going to be a market for it, he said. “People that should be worried about robo advisors are those operating in the $0-5 million space because I think they are going to see enormous fee compression – but we’re not in that market. Our families want customized solutions, driven by a high level of intellectual capital. I don’t see how you can migrate that online.” Meanwhile, Trokey said he worries that the industry doesn't place enough emphasis on adding value to a family by serving as a coach. “The robo advisor cannot fix that piece of the value proposition.”

For Winslow, central to a value proposition is an advisor's identity. “We spend a great deal of time talking about our identity, who are we. No one is going to make a buying decision based exclusively on brand; it’s about the identity behind it – I think that has to be well-defined. It is difficult to get referrals if you don’t have an identity that centers of influence can connect with, so to speak.” He added that, in the wealth world, “all the commercials look the same.” Marketing is “so generic” that if you’re basing any kind of decisions around that “you’re going down the wrong path.”

Likewise, Jehle said a fifth of FFO's business comes from people who aren't referrals, due to the firm's thought leadership and branding. “They’ve seen us around and then they have a pain point and think of us. For us, referrals are still 50-60 per cent. A pretty website may get you the call, but then you have to convince them that you can do the job.” His advice is to ask clients what they need first - “don’t just say 'this is what I do.'” In the words of Trokey, “there is no silver bullet.”

“The challenge goes beyond saying 'we have a talented team, we put clients first' – there are lots of clichés and it’s beholden on us as an industry to get beyond them,” said Rudin. “Who doesn’t have a talented team? Who doesn’t put clients’ best interests first?”