Educating clients is a smart way to keep them on board for the long haul, including during those rough moments, points out HighTower.

Educating your clients is a smart way to keep them on board for the long haul, including during those rough moments when markets go sour.

It sounds like an obvious point, but at The Lerner Group at HighTower, regular engagement with clients is crucial. The US wealth management house provides regular opportunities for clients to learn about the firm’s thinking, while also encouraging debate. This, it believes, is not only important for client retention, but is vital to bring in new clients too.

This publication recently spoke to Walter Gondeck, partner and managing director at The Lerner Group at HighTower - a member of the partnership which currently has 46 teams. Asked about how the firm engages with clients on a day-to-day basis, the point about educating clients emerged as a big concern for The Lerner Group.

Gondeck said the firm holds monthly seminars for clients/friends of clients (about 50-70 people). “An educated client is a better long-term client,” he told Family Wealth Report.

HighTower has been staging these seminars for the past 10 years – a period spanning the real estate market bubble, the 2008 crash and subsequent and sometimes uneven recovery. Anyone attending such seminars has been on a sharp learning journey.

Wealth managers sometimes will say of how they win new clients through “word-of-mouth” referrals. What The Lerner Group does with its seminar events is to ensure that non-clients, when they come along to an event are so impressed by what they see that the logical next step is to sign up.

The idea of working to educate clients and their offspring is hardly unique to The Lerner Group, of course. GenSpring, Threshold Group and Wells Fargo, for example, have made moves in this area. The trend is part of an industry shift away from focusing purely on the financial side of wealth planning, with advisors and investors increasingly recognizing the importance of addressing the “softer” elements of wealth.

HighTower has certainly been busy lately.  In early September, HighTower transitioned its 46th team with the addition of Wolf-Collins Wealth Management in New Jersey. In August, HighTower added the Baltimore, MD-based 401(k) practice Fiduciary Plan Advisors to its Network aimed at breakaway advisors. (To see more about that business arm, see here.)

The Lerner Group is part of umbrella organization HighTower, which also has a number of other elements in the stable. HighTower was launched in 2007.

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Another way in which HighTower likes to engage with clients is to make it easy for them to see and understand decisions managers make about the individual investments and securities that are bought and sold.

An important differentiator is that The Lerner Group at HighTower does asset management in-house and doesn’t outsource it, Gondeck said. Depending on the kind of requirements for income that a client has, The Lerner Group can explain what sort of asset allocation and degree of risk needs to be run to deliver it. If this is not possible at a risk level that a client is unhappy with, that is usually a sign that the requirements are unrealistic and need to be changed, he said.

There are three broad asset management models for clients at The Lerner Group: "long-term growth”; “high-dividend equities” and “fixed income”.

“We have an ongoing discussion with clients about the three models,” Gondeck said.

The teaching mentality also extends to how best to bring in the next generation, he said.

“Many of our clients wish to educate their family on investments and financial literacy and have found that establishing family foundations has provided an appropriate avenue to get the children and grandchildren involved in understanding how investments need to be handled to reach an objective. For those of our clients who do not have family foundations, we encourage them to begin annual gifting to their heirs. We can educate families on long-term investing decision making and building toward their retirement,” Gondeck said.

In summary, educating clients is a central part of what The Lerner Group is all about.