Services beyond investment management play an important role attracting and retaining clients for wealth managers. The larger the client’s wealth, the more complex and demanding their needs, which means the wealth manager must offer far more than just concierge services to entice and keep this type of person or family.
However, adding more features focused on luxury, pampering and personal needs won’t necessarily cut much ice with the ultra high net worth set – nor will such services provide a guarantee of differentiation, either. High-end wealth managers in particular must be increasingly creative and comprehensive in their approach to “value-adds” in order to keep a client’s loyalty.
In an effort to address the specialized needs of this type of client, JP Morgan Private Bank introduced the Advice Lab 15 years ago as part of its proposition to serve the high end of the market.
Advice Lab was designed to be a “think tank” within the firm’s private bank, consisting of a team of experts who develop cutting-edge analytical tools and strategies to help clients maximize planning for activities such as closely-held businesses, executive compensation and philanthropy. The team is led by Janine Racanelli and consists of 12 people, who have varied areas of expertise, from taxation to capital markets.
In the turbulent markets of the past two years, it became critical for UHNW investors to keep abreast of developments in market, economic and political matters. For that reason, the Advice Lab has been busier than ever.
“We’ve seen a marked rise in requests for its services from existing clients and seen a higher level of interest than ever from prospective clients,” said Racanelli.
The unit also monitors changes in the legislative landscape and carefully evaluates how proposed changes might impact how clients approach planning. For example, when legislation was proposed earlier this year that would change the attractiveness of one of the most popular wealth transfer tools, the Grantor Retained Annuity Trust (GRAT), by imposing a 10 year term and requiring a minimum taxable remainder, the Advice Lab put out an in-depth research and analysis on the key considerations to enable clients to make time-sensitive decisions on how to respond to the changes.
Dealing with uncertainty
“No one could have predicted the uncertainty which we continue to see on the legislative front on taxation and this has had tremendous impact on the wealthiest investors,” said Racanelli. “These people (the clients) don’t have the time to chase the information and figure out what it means to them – but if they don’t, it could cost them dearly.”
Being adequately informed on GRAT developments is “absolutely critical” to business owners, said Racanelli. Many are considering if they should sell their business now in light of increased taxes slated for next year, and having this information could make a difference of millions of dollars in some cases, she says, in terms of timing the sale.
In particular, one family with whom JP Morgan recently worked was considering selling its $50 million family business and was surprised to learn through a detailed analysis conducted by the Advice Lab that the financial legacy for its children could be enhanced by about 50 per cent or $29 million by implementing some basic planning techniques.
“What is often surprising to business owners is the significant increase in value they can achieve through basic planning and that the process does not have to be complicated to be effective,” says Robert Weiss, an Advice Lab team member who works primarily with business owners.
JP Morgan is one of the oldest banking institutions in America and has traditionally catered to the wealthiest investors, first in the US and then branching out globally. Its roots trace back to the Manhattan Company, formed in 1799, Chemical Bank, formed in 1824 and Waterbury Bank, formed in 1848. J Pierpont Morgan Sr. became the senior partner in 1895 and at that time the firm became known as JP Morgan and Co. At present, the private bank has $720 billion in assets under management and 2,000 client advisors.