Rogerson’s Move To Wilmington Strengthens Case For “Soft Side” Services

Charles Paikert Contributing Editor New York 12 October 2011

Rogerson’s Move To Wilmington Strengthens Case For “Soft Side” Services

The "soft-side" of wealth management - preparing a family for money - is a growing part of what the industry has to offer.

Wealth management’s “soft side" keeps getting stronger.

For the latest evidence, look no further than Wilmington Trust’s high-profile hire last month of Tom Rogerson, a 55-year old industry veteran who spent the last nine years as managing director of Family Wealth Services for BNY Mellon Wealth Management.

As managing director and “family wealth strategist” for Wilmington’s family wealth services division, Rogerson will focus on family meetings, governance and communication strategies, he told Family Wealth Report in his first interview since joining the company, which is in the process of sharpening its’ identity following its acquisition by M&T Bank Corp. in May.

The emphasis on the soft side of the business is an outgrowth of his background as an estate tax planner at Kidder, Peabody and Coopers and Lybrand, Rogerson said. “I switched to the other side of estate tax planning at Mellon,” he explained. “I realized it’s not how you prepare your money for your family; it’s how you prepare your family for your money. Most parents don’t have a clue how to do it.”

Indeed, an increasing emphasis on non-investment services is becoming a full-blown trend at cutting-edge wealth management firms. US Bank just launched Ascent Private Capital Management, a new division targeting ultra-high-net-worth clients with a net worth over $25 million, and is also highlighting what it calls “wealth impact” services for families about to experience a liquidity event.

Morgan Stanley, Northern Trust, BNY Mellon and Bessemer Trust all host conferences and workshops to help educate the “next generation” of families and wealth management firms are also increasingly hiring psychologists to work with wealthy clients and families.

“When I started in estate tax planning in 1983 it was fragmented cottage industry,” Rogerson said. “Today it’s much more mature. Now everybody knows what a family limited partnership is. When I look at the family governance field today, it looks like estate tax planning did almost thirty years ago.”

Disagreement on pricing

Not everyone is approaching the soft side the same way, however.

While there is general agreement that wealthy families need better communication, education, governance and preparation for transitions, firms are divided on how to price these services. Ascent plans to charge its clients on a fee-per-service model, according to Michael Cole, another high profile industry veteran who US Bank lured away from Wells Fargo last  year to head its new UHNW division.

But the industry standard is to include non-investment deliverables as part of the standard percentage of assets under management fee structure. While soft side services may be sought after, few clients have shown a willingness to pay for them as a separate line time, say industry observers.

At Wilmington, family governance and meetings will be “part of the service we provide”, for its standard fee, Rogerson said. “Doing it separately gives the client the idea that these are separate concepts, and we disagree.”

No matter how soft side services are priced, industry observers expect the demand to increase.

Rogerson cites studies by the Family Office Exchange and consultants Roy Williams and Vic Preisser. The FOX report surveyed wealthy families and found that 93 percent thought the most likely way the family would lose its wealth was through bad investments, a bad economy or onerous taxes, while only seven percent thought it would have anything to do with the family itself.

But in their book “Preparing Heirs” Williams and Preisser surveyed the fortunes of over 3,000 wealthy families found that the families who failed to successfully transfer wealth, the primary reasons were due to lack of communication and preparation within families, while poor investing was responsible for only three percent of failures.

“If sixty per cent of the failures were due to lack of communication, then we believe it’s important to understand their communication style and use that as a starting point to learn and talk about other issues,” Rogerson said.

“It’s easy to design and administer a transition that is designed to  distribute money to beneficiaries,” he argued, “but it’s hard to design and administer a transition that’s designed to invest into beneficiaries”.


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