The Importance Of Educational, Value-Add Services - Interview

Harriet Davies Editor - Family Wealth Report 16 May 2011

The Importance Of Educational, Value-Add Services - Interview

Silver Bridge Advisors has undergone a 10-year investment program including the formation of the Silver Bridge Institute, its educational platform. And Steve Prostano, the firm’s chief executive, says firms now have to do more than just offer a good investment management service.

Silver Bridge Advisors, which has a multifamily office division working with ultra-wealthy families and single family offices, has been investing considerably in educational services for clients. And Steve Prostano, the firm’s chief executive, says firms now have to do more than just offer a good investment management service.

The company has undergone a 10-year investment program including the formation of the Silver Bridge Institute, its educational platform focused on “knowledge-based empowerment for investors,” according to Prostano. The Institute is comprised of both faculty and Silver Bridge employees who are dedicated to educating clients on topics such as strategic philanthropy, building a financial foundation, the family business, and making good investment decisions.

Addressing the errors of the industry

There is, he finds, such a level of mistrust among financial services consumers generally as a result of people like Bernard Madoff and the hedge fund tycoon Raj Rajaratnam that clients are looking for a “strategic partner” more than an advisor – someone they can trust to guide them through the turbulent waters of finance.

And there is no easy way of proving you can be that firm: clients will often test you before they officially commit to the partnership, by allocating a small portion of their wealth to you, or signing on for a consulting project, says Prostano. Ultimately you can only prove with time that you can deliver the service you say you can.

However, word of mouth and client recommendations are key in this environment, which is one of the reasons Prostano believes the return on investment in providing the “value add” services – such as on the educational front – more than justifies the expenditure from a business perspective. Silver Bridge will therefore be further building its faculty of curriculum advisors and continuing to develop the series of seminars and workshops for clients.

“It’s one of the most important things we’re doing. The return on it is greater than any other kind of investment, because in this day and age, a client-centric outlook is essential,” says Prostano.

Indeed, recent research by SEI showed that a client-centric approach often makes the difference between a good and bad experience for a client with a wealth manager (here).

Also, working with the ultra-wealthy segment, there are different family members to consider. In terms of female clients, while there is no academic basis for offering different products, Prostano says, research has shown the genders learn best in different environments. Dune Thorne, a managing director at Silver Bridge who did her MBA at Harvard Business School, has carried out research on this topic.

Therefore, it is important to think about who your clients are, and ensure they get the information they need to feel comfortable in their decisions in a way that suits them.

To this end, the technology used to deliver information will also vary depending on the generation you are dealing with, says Prostano. However, he adds that “even a 70-year-old patriarch” is very interested in the efficiencies certain new tech solutions can deliver.

Silver Bridge is in the process of rolling out a customized information management portal to bridge communication across families. It will allow information among members and their advisors to be shared easily. This will offer SFOs resources such as educational content, collaboration tools, document management and storage, and a diary feature, while making different information available to different family members depending on their group level as defined by the family.

The SFO connection

The firm currently serves around 28 ultra-wealthy multi-generational families, eight of which have some type of single family office.

Families who have had an SFO for many years aren’t going to want to “shut its doors completely”, says Prostano, as they simply won’t feel comfortable suddenly handing all their affairs over to an outside institution – however large or small. So outsourcing or having the head of the family office become part of an MFO such as Silver Bridge have become viable solutions for some.

“After Madoff, and other events, they don’t want to hand everything over to you. So where they are in existence, SFOs aren’t going to just shut down, but compliance requirements and costs are driving these families to think about their options, and outsourcing or working with an MFO is one,” says Prostano.

The way the industry is at the moment, “flexibility is the opportunity,” he adds.

Meanwhile, he says families are becoming more and more conscious about preserving their wealth for future generations. That may be because of the events they’ve witnessed in recent years, or the significant global economic shift occurring.

But whatever the reason, families need that “strategic partner” to help them manage and pass on their wealth, and the company is, according to its CEO, investing to position itself for that role.


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