The UHNW Institute has issued a new white paper that looks at what integrated wealth management means, how it can drive profits and what the limits and trade-offs are. We talk to the paper’s authors about why this topic is important for UHNW clients and those serving them.

When clients increasingly ask for a wider range of services from advisors, pushing beyond tried and tested areas such as investments, a more holistic approach draws on the need for wealth advice to connect coherently to different elements. In short, it means being “integrated.”

But while many firms’ strategies for winning and keeping clients may require a more integrated approach, that does not mean that adding ever more service lines to a business is the same as genuinely integrated offerings. How such services are co-ordinated is what counts, authors of a new white paper for the UHNW Institute say. (Family Wealth Report is exclusive media partner to the Institute, a US-based think tank. See details on the Institute's forthcoming symposium in New York City.)

“We have seen across the industry a continued growing desire for integrated advice and a single point of contact,” Kevin Casey, managing director of Pathstone Family Office, told FWR. He co-authored the 14-page paper with Joe Calabrese, COO of Key Wealth. 

Casey noted that more M&A deals in wealth management today, for example, are driven by a desire to add fresh and expanded service offerings to their client service model rather than simply seeking capital for liquidity..

“Having looked at hundreds of firms, many that are selling a single-value proposition have seen their growth slow or plateau and expanding services can often be seen as a means to rejuvenate that growth,” Casey continued.

Calabrese said that the Institute is exploring different aspects of how integrated wealth management approaches can be applied to today’s industry. “We are not suggesting that an integrated model is better than the specialist model,” he said. 

“Our quest is to provide operators in this industry with insights about how to think about incorporating integrated management into an existing business model if it’s the right choice for them,” Calabrese continued. For example, firms must consider the financial impact of integration and the potential to avoid expanding lines of business if that comes at the cost of unacceptably eroding margins, he said. “Unless you are prepared to commit to an integrated wealth strategy and have the culture to support it, it might be a wiser course not to embark on that journey.”

“Providing multiple services is and of itself not the same as integration,” he said. 

Central to an integrated wealth management model is a culture of collaboration. Firms thinking of delivering integrated wealth management must seriously consider how their firm’s culture aligns with a collaboration imperative, Calabrese added.

Among the central ideas of the white paper is the DuPont Model. Originally developed in the early 20th century by an engineer at DuPont, this framework was designed to break down return on equity (ROE) into its core components. The model, adapted in this paper to the wealth management industry, enables its users to grasp what they must do to make their business more profitable.

To view the white paper, click on this link.