How Do You Train A Good UHNW Advisor?

Harriet Davies Editor - Family Wealth Report 14 September 2011

How Do You Train A Good UHNW Advisor?

Dr Jim Grubman discusses the qualities that make a good advisor to the UHNW, and his current project to formalize training and qualification in this area.

Firms are willing to reward the best advisors very well, but “best” encompasses a skill set that is hard to find – from the highly analytical to the interpersonal. Nowadays there is more of a focus on the interpersonal side than ever, as the idea of family dynamics gains credence, and firms realize the necessity of being client centric. Indeed, while being truly client centric remains a differentiator in a relatively undifferentiated industry, claims of client centricity are ubiquitous.

When it comes to UHNW clients, being client centered means working with the whole family, because at these levels the issues of succession, trust management, foundations and philanthropy enter the picture, points out Dr Jim Grubman of FamilyWealth Consulting. And working in this environment is challenging for advisors if they don’t have the right skills.

“It’s easy to re-write your website and say you do integrated wealth management for the whole family, but having your in-house staff truly deliver that is quite difficult,” says Dr Grubman. “I’ve seen a major upswing in people reaching out to me and my colleague Dr Dennis Jaffe to get training.”

How to deliver?

For firms who want to get UHNW client relations right, a top-down initiative is best, according to Grubman: “It needs to be institutional. Individual advisors may want to do this, but unless the firm supports the advisor on a deep and wide level, the advisor is swimming upstream – against sales pressure, profitability and cost worries, and possibly even the culture of the firm.

“One of the difficult issues is pricing, because families don’t want to pay extra for family-dynamics help and firms often think this requires special expertise.”

Pricing of services is an increasing issue in the industry, but Grubman says some initial cost outlay for advisor training will improve margins and long-term profitability. “There is some cost, but what is actually going on is a change in efficiency. It’s the 80/20 rule,” he continues, “where advisors are already spending significant time on a small number of highly problematic client issues, but may be dealing with them poorly. This actually impacts advisors’ results, because you have recurring issues and time wasted on the phone if you don’t address this. Knowing what to do with these issues frees up advisor time - and energy.”

Furthermore, Grubman thinks only a moderate amount of training is needed to get advisors’ interpersonal skills up to a level where they can deal with low-to-medium levels of family dynamics. “If you can train advisors to understand the basics, so they can deal with problems more efficiently, it’s more plausible than you think.” It’s about “how to pick up issues and manage the simpler ones,” as well as learning how to triage with experts when the issues go deeper. According to Grubman, training advisors in this area is not part of the cost problem, but part of a wider cost solution.

He says that the issues are qualitatively different than at lower ends of the wealth scale. Interpersonal skills are always valued in an advisor, but at the UHNW level the necessity of dealing with a whole family makes these skills much more valuable.

This, he says, is another part of the problem, as advisors who have a background in the mass affluent market may later move into the HNW and ultimately the UHNW space, but the problems are different among these client segments due to the bigger family component.

A formal program

There are certain certificates advisors can obtain to showcase various capabilities, such as the Certified Financial Planner (CFP) and the Chartered Financial Analyst (CFA) credentials, as well as the Certified Investment Management Analyst (CIMA) and Certified Private Wealth Advisor (CPWA) designations – the latter of which Grubman has been involved in for the family dynamics section.

More recently he and Dennis Jaffe have been working with Northwood University to develop a program focusing specifically on the interpersonal side of managing family wealth. So far, there is a two-day workshop planned for early November in Dallas, with the idea of rolling this out to different parts of the US and internationally afterwards. (Click here to view program.)

“Dennis was approached by Northwood to develop this based on some writing he and I did.  What was particularly attractive is that they have outposts in places like Geneva, London, and Hong Kong,” says Grubman, who says they hope to take this idea “much further.”

He likes the idea of ultimately having a certificate in this area, but knows how difficult it is to assess these kinds of skills. He says there are parallels to be learned from the healthcare industry, where role-playing is used in the assessment of bedside skills. But any such program has to be scalable, quality controlled, and translatable to real-world situations so the skills are genuinely useful.

“The next five-to-ten years is going to be about trying to pin down how to teach and assess this properly,” says Grubman.

But how important is it to formalize this process? If advisors can attend workshops to improve their skills, how important is it to demonstrate this with a certificate?

“The major issue in wealth management is talent – finding it and retaining it. Those advisors who really have the talent at the ultra high net worth level are very rare,” says Grubman. “Yes, these people require very broad knowledge of tax, risk, financial and compliance issues, but you also need to be able to put them in a room with a client family and feel confident they will relate well.

“These intangible skills often make or break client relationships at the family office level.  Having agreed-upon ideas about what these skills are, and demonstrating and certifying them, would be immediately advantageous.”

Grubman says people have certainly woken up to the problem, but the industry has been “somewhat preoccupied, to say the least” in recent years.

“Lately clients are once again paying attention to deficiencies they encounter in wealth management, and want better service.,” says Grubman. “There have been multiple industry reports in the past nine months emphasizing the gap between what clients want and what firms are delivering. With the advent of better training options, it’s more possible than ever for firms to deliver on their promises of ‘client-centered’ wealth management.”


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