Wealth consultants advocate "no strings" approach to educating clients. Wealthy families want more than winning investment strategies. They want to understand their investments - and a recent poll of ultra high-net-worth investors suggests they're growing impatient with their advisors' inability to help them do that. That means advisors have to start educating their clients about investing in ways that are entirely free of product-push, say wealth industry players.

Last year the Institute for Private Investors (IPI), a New York-based education and networking resource for ultra wealthy families, asked 300 of its private members what general improvements they'd like to see in the wealth management industry. Four of 10 said "willingness and skill in investor education." But well-to-do investors aren't alone in seeing education as a priority. Responding to weak markets in the aftermath of the dot-com meltdown and a series of high-profile corporate fraud scandals, the Securities and Exchange Commission set up a fund in 2004 aimed at improving investors' grasp of investing concepts and principals.

The IPI has taken action as well. Last year it established the Investor Education Collaborative (IEC). The brainchild of IPI CEO Charlotte Beyer and Susan Remmer Ryzewic, the IEC seeks to help advisors educate their clients in a format that attempts to replicate the frankest and most beneficial interaction Beyer and Ryzewic have seen in 14 years of observing investors and advisors communicate with one another.

In practice that boils down to a series of case studies that advisors can use as teaching aids with their clients. By taking a family members through a case study and then examining it together in a structured question-and-answer session, the IEC says advisors can help family members get a better understanding of their fundamental attitudes about investing, including insights into the degree to which those attitudes may be shaped by purely behavioral processes, as well as a firmer grasp of the investing principals at work in their own portfolios. In turn, says the IEC, advisors who use the case studies come away with a deeper understanding of their clients' attitudes and expectations about investing - enlivened, says one advisor, by a new appreciation of their clients' family dynamics.

"IEC plans to set the standard in investor education by offering a more engaging way to teach vital investing concepts," the IPI says in a press release. "The goal is to offer an affordable, successful method for investor education using proven techniques and technologies."

Daniel Geary, director of Lydian Wealth Management's Philadelphia office, says the IEC approach works. "It's exciting because it gets people to interact," he says."People are more used to straightforward PowerPoint presentations - you know, where you explain investment concepts and the yield curve, and after five minutes everyone's asleep."

The Metropolitan Group is a proponent of the case-study approach to educating high-net-worth families. The Cresskill, N.J.-based consultancy for wealthy families has developed nearly 30 case studies around topics such as family governance, succession planning and conflict resolution. "[The IEC] goes deeper on the investing side; you could say we go deeper on the family side," says Mark Rubin, a managing partner with the Metropolitan Group.

But Rubin has nothing against more traditional approaches to investor education. "Some families learn more from a didactic methodology; others respond better to an interactive approach." For instance, he says, "next-generation" family members - those in their late teens and early 20s - are more likely to benefit from conversational, group-based interaction than some of their older relatives. The power of the IEC's case-study method, says Rubin, is in its ability to give advisors more flexibility in their approach to educating clients.

Lydian's Geary agrees. "It's definitely the way to teach if you really want to get a discussion going in a small family group as opposed to the family leadership," he says.

Geary presented an IEC case study called "Roller Coaster Markets" to a family of six - a mother and father, their three adult offspring and a spouse of one of the children - in a two-hour session of broader-context family meeting. He says the case study, essentially a study of investment risk, was an easy three-page presentation that took little time to run through with the family. The rest of the session was devoted to Geary's questions, mostly gleaned from the case study facilitator's guide, and the family members' responses. "It's role-playing with the family members putting themselves in the place of those in the case study and analyzing what happened to them," says Geary. "People got very active - including some who'd been more reluctant to take part [in previous discussions]."

The reaction from his clients was positive enough to make him want to lead other families through IEC case studies, says Geary. And, he adds, the exercise gave him a deeper understanding of his clients. "This goes beyond investing to show the family dynamics around investing at work," he says.

All that said, the Metropolitan Group's Rubin says advisors interested in educating their clients should resist the temptation to wing it. "What we're really talking about here is how families function," he says. "So if you don't understand that, and don't know what you're doing, you could potentially give out the wrong message." That is, without the right tools and training, an advisor could come off someone looking merely to capture more of a family's wallet share. "It's very important to be clear about your intentions," Rubin emphasizes.

And, though Rubin recognizes that high-net-worth families are becoming more sophisticated in the dealings with advisors, they still "have to be careful about who they're talking to, and try to understand when someone's offering education or just trying to get at a source of [assets under management]." -FWR