It is a well known fact that most wealth managers are not wealth managers at all because a) they don’t work with enough wealth and b) they don’t do enough management. The confusion in terminology is profuse—specifically the lack of a shared understanding with respect to who is wealthy enough to be classified as a candidate for wealth management; what services are included in the wealth management package and which ones are required versus optional; and how much “management” or integration is necessary for the collection of services to become a service in itself rather than just a “bundle.”
These questions have a particular significance for solo advisors who practice as wealth managers and who need to somehow assemble a value proposition that remains competitive with the industry but is, at the same time, viable for the limited resources—time, knowledge and money—of a single professional.
The large banks, wirehouses and independent firms can afford to meander through the service possibilities; a solo firm, however, needs the answers to be clear and timely. After all, a solo wealth manager can be seen as a contradiction in terms—something like a one-man band or a self-employed conglomerate. One person can only know so much, can only do so much; so it is critical that solo advisors invest their resources wisely. To a degree, the question is simple, if a bit frightening: Should solo advisors even try to be wealth managers?
In my mind, the industry and the “theory” relevant to wealth management are defined by the practitioner’s intention to be comprehensive in his advice to a client whose financial life is complex enough to warrant such a comprehensive examination. In other words, the standard is entirely subjective, and that’s just fine. If for a moment we ignore the argument of how to best service the client, the business questions—and answers—are:
¬ Can a solo firm assemble the comprehensive services
implied in the wealth management proposition? It seems that the answer is “yes;” there is no significant difference between the services offered by solo firms and ensembles.
¬ Can a solo practice attract a wealthy enough client base to practice wealth management? Not as much as a large firm, but solo firms definitely can get quite far.