Wealth Biz Buzz

“What’s in a name?”

“What is in a name?  That by which we would call an account, by any other name, smells like a process to thee”

A poor Shakespearean rip-off by all means, but I absolutely hate the name UMA.  It’s not that I have a better moniker, but for me UMA” has always been a misnomer.

Who actually gets to name stuff like this for an entire industry?  A question for another time, but for now, lets just say I don’t think the name accurately describes what is more of a process than an account.  So agrees Michael Stier, the President and CEO of Adhesion Wealth Advisor Solutions, a leading outsourced investment management firm, who recently told me, “for some time now in our sales & marketing collateral and dialog the term “UMA” has been relegated from the ‘headline’ to way back in the implementation details.”

Of course, “Reengineered investment management process using advanced technology and intellectual capital to provide scale, customization, efficient rebalancing and tax harvesting in a single account that combines individual securities, mutual funds and ETFs” doesn’t exactly roll off one’s tongue. Read more »

Well, that is the question – or at least one of the major questions facing money managers today.

For the past few decades the debate over open, versus hybrid, or closed architecture has echoed through the halls of iconic institutions and single-shingle RIAs – through money center banks and community bank trust departments. Read more »

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.  
Read more »

In this post, industry expert and attorney Jim Eccleston provides insight and counsel on Broker Protocol.   This is invaluable information for any broker considering a move as well as for hiring managers.

In early 2009, I examined the Protocol for Broker Recruiting (the “Protocol”) and court opinions applying it to situations in which financial advisers had transitioned their employment from one financial services firm to another.  The Protocol initially was conceived as a “safe passage” set of procedures which allowed signatories to the Protocol to avoid litigation (TROs, other injunctive relief and damages) associated with the solicitation of clients and the taking of client information from one signatory firm to another signatory firm.

Moreover, at the time I also spoke of an “unintended consequence.”  That is, non-Protocol signatories, faced with litigation, began arguing that the Protocol effectively had become an industry standard for transitioning financial advisers.  Those non-signatories to the Protocol therefore contended that they should not be subject to TROs, other injunctive relief and damages even though they themselves might have signed employment agreements or other contractual agreements that expressly had contemplated such relief.  I concluded at that time that such a creative argument had experienced considerable (though certainly not universal) success in the courts. Read more »

The first rule of holes is when in one; stop digging.  

Yet, when assessing the performance and structure of wealth management programs at banks, we continue to witness an inordinate number of institutions grasping tightly to suboptimal business models.

This is frequently prevalent in bank brokerage and bank trust departments (and/or RIAs).

In future posts we will touch upon specific remedies for releasing this stranglehold grip, but in this entry our focus is on trumpeting the need for change and the consequences for hanging on too tightly.

According to the FDIC managed assets in bank trust department continue to decline. From the end of 2001 to June of 2010 banks lost $270 billion of assets or viewed from a different perspective 270,000 million dollar accounts. Performance between December 2009 and June 2010 shows a loss of $410 billion in those six months alone.

Here’s how Chip Roame of Tiburon Advisors recently characterized the challenges bank trust departments face: Read more »

In our last post on the Power of Process (part 7) we highlighted the importance of increased levels of due diligence in the post-Madoff world.

In previous posts in this series we discussed the importance of focusing on client goals beyond purely maximizing returns.

Most investors have more than one goal or purpose for their money.  To treat these on equal footing, applying the same risk tolerance and portfolio construction belies the underlying fact that investors look at these “pots” separately.  They surely look at purchasing a vacation home or a sailboat differently than educating their children.  Investment strategies today, seldom make this distinction.

As advisors, we have been taught to look at the whole picture in order to ensure we reduce risk by having the proper allocation across multiple, uncorrelated asset classes.  Of course, we all see how that worked out; learning instead that those uncorrelated assets became highly correlated, thus rendering the old strategy moot.

By looking at investments from our clients’ eyes, we first must recognize that most people are saving and investing their money with one or more purposes in mind.  These purposes are what cause fear and anxiety on one hand and motivation and opportunity on the other.  Compartmentalizing investments allows investors to modify their behavior relative to each specific purpose instead of looking at the portfolio as a whole and stressing about its overall performance. Read more »

You unlock this door with the key of imagination. Beyond it is another dimension: a dimension of sound, a dimension of sight, a dimension of mind. You’re moving into a land of both shadow and substance, of things and ideas; you’ve just crossed over into the Twilight Zone.

The Virginia Bankers Association asked me to give a presentation on Integrating Wealth Management business lines in banks; most notably trust and brokerage.

As I prepared my remarks, it came increasingly clear this decades-old problem will not be solved by using the same thinking that got us into it.

It also got me thinking about how difficult it is for businesses to navigate through multidimensional challenges in the “New Normal”. Read more »

Thanksgiving 2010: November 25

A heartfelt and sincere thank you from KaneCarlton and Wealth Biz Buzz; for without  you, we don’t exist.

Throughout history mankind has celebrated the bountiful harvest with thanksgiving ceremonies.

Before the establishment of formal religions many ancient farmers believed that their crops contained spirits, which caused the crops to grow and die. Many believed that these spirits would be released when the crops were harvested and they had to be destroyed or they would take revenge on the farmers who harvested them. Some of the harvest festivals celebrated the defeat of these spirits.

Harvest festivals and thanksgiving celebrations were held by the ancient Greeks, the Romans, the Hebrews, the Chinese, and the Egyptians.

There is some debate as to when the first Thanksgiving was held in the United States.  Since it was a continuation of celebrating a successful and plentiful harvest, many believe that the Jamestown settlers held the first Thanksgiving in the United States in 1619. Read more »

Mike Prior, a friend and successful manager of an investment services program for a group of credit Unions, has a formula that works for him.  It is simply, People, Process and Profits – in that order.

Those of you following the Wealth Biz Buzz blog realize we focus a considerable amount of attention on the importance  process plays in building a competitive wealth management business.  We sincerely hope you continue to find value in those posts and assure you we will continue to provide insight into best practices and the latest trends for competing more effectively, better serving your clients and improving the overall value of your businesses.

Yet, to leave the most important element of success unaddressed seems redonkulous. Read more »