Wealth Biz Buzz

Einstein said, “We can’t solve problems using the same kind of thinking we used when we created them.”

When solving the challenges of integrating wealth management business units within financial institutions, it’s surprising to see so many banks try variations of the same old, same old.

In fairness, this Groundhog Day scenario replays itself because the payoffs of integration are so meaningful, while the task – Herculean.

Throw Private Banking and Insurance into the mix and watch the complexity meter spike into the red.  

Of course, all integration is not created equally; as there are multiple degrees and perspectives of what true integration means.

Because of this and the mountain of biases that people from opposing camps bring to the table; to succeed we need to start our journey with an open mind and some parameters around what integration means.  So, for the purposes of these posts, let’s not focus so much on the “I” word, but more on harnessing the power of existing resources in your organization to improve the client experience, to enhance competitiveness and stakeholder value.

Additionally, let’s dispel the notion that “Integration” always must include a wholesale restructuring.  For some institutions minor tweaks within certain business lines may be all that is required to harness the power and improve stakeholder value.  For others, a clean slate where everything is possible will be the most productive approach.

Regardless of your position and biases, most readers realize that having our brokerage department tell Mrs. Smedlap to sell GE, while our Trust department is buying it for her and the RIA has put forth a hold recommendation, while she is sitting on a mound of low basis GE from 30 years of service, isn’t quite the clean business model and image we would like to present.

Of course, this extends to your investment models as well; brokerage has 12 allocation models, Trust has eight and the RIA a dozen of their own; all with different compositions and different names.

Many of you are likely reading this thinking “why doesn’t he just tell us the most effective ways to go about achieving the results we seek.”

And, therein lies the elephant in the room.

For until we can gain a fresh perspective and meet the challenge using some new and creative thinking – all roads lead back to the definition of insanity.

How many times will we try to draw a line in the sand using some arbitrary monetary measurement to regulate the direction of a referral to either a salaried fiduciary or to a commissioned broker?  

For those readers who have such a structure in place, that is working, please leave your comments.  For those who have tried this (maybe more than once with multiple variations) please comment as well.

The need for new thinking reminds me a story…

A second grade girl was sitting at her desk, obviously not paying attention to her teacher.  The teacher noticing the girl’s lack of attention walks to the back of the room and asks, “what are you doing?”  The girl says, “I am drawing.”  “What are you drawing”  “I am drawing a picture of God”  “How can you do that”, asks the teacher, “no one knows what God looks like”.  They will when I am done, replies the girl.

Alas, I promise we will dig into the nitty-gritty details, as much as a blog posting allows, but first we have to conquer Culture and you need to meet Mr. Goldberg.