Many wealth management companies have more success marketing their services to the professionals who already have the ear of wealthy clients. Lawyers, investment advisors, accountants, even art appraisers are all worth adding to your network.
Accountants, lawyers and other advisors rarely have the power to decide where a client opens a trust account, but they do have an enormous influence on the choice, says analyst Robert Testa, now with Wells Fargo, who I talked to back when he covered the private wealth management industry for Cerulli Associates.
“Especially for trust companies, we’ve found these reciprocal relationships with other professionals are the most effective way to gain clients,” he told me.
Think of these professionals as the Oprah Winfreys of the wealth management world.
Oprah doesn’t actually sell books, but one plug from her helps millions of potential book buyers make up their minds.
The relationship between estate planner and client works a lot like this, Testa says.
When a lawyer or financial planner realizes that it’s time to move assets into a trust, the client rarely has a strong opinion on which trust company to go with. Instead, what the planner usually hears is, “What do you suggest?”
Being the answer to that magic question has translated into new business for 68% of the bank trust departments that Testa’s team polled last year, and independent trust service providers would be well served to follow suit.
It’s all about relationships
Estate planners are an obvious fit because they are at ground zero whenever a wealthy family decides to set up a new trust or modify an old one.
However, if you want to get the real inside track on how potential clients’ financial situations are changing, get friendly with their accountants, Testa says.
“You would think people would be more honest with the trust officer or the asset manager, but the CPA knows everything,” he explains. “Once you get a close relationship with the CPA, you can gather the assets.”
Corporate entitities can wield influence too. Millennium Trust got a substantial profile boost this spring when Schwab Advisor Services pointed it out to its 6,000 advisors as a custodian for alternative assets that were no longer welcome on the Schwab platform.
“What we’re able to do is go after the advisor market,” Mary Hackbarth, who heads up Millennium’s marketing, told me. “In terms of business strategy, working with advisors as centers of influence has worked out.”
Even an influential brand goes a long way. When the Dow Jones news service wrote up trust consulting firm Advisors Institutional Services, its marketing team was quick to license reprints that paired the story with the venerable Wall Street Journal logo. While it isn’t an endorsement, the logo still has a positive influence on prospective clients.
Anyone in a position to weigh in on the decision-making process is a potential referral source.
Real estate brokers and insurance agents are worth adding to your professional network because they’re often on the scene when people make pivotal life decisions or come into significant wealth.
Robert Testa also recommends cultivating more esoteric professionals on the off chance that they’ll have the right ear at the right time.
“We’ve even heard that the art valuation experts at UBS have referred their clients toward trust companies,” he tells me.
Naturally, financial planners and other registered investment advisors are a time-honored center of influence.
Jocelyn Schwartz, who ran Fidelity’s estate planning business and is now a financial planner at Pillar Financial Advisors, is often in a position to direct new business to trust companies and the lawyers who write up trust agreements.
She’s also used her influence to move accounts from legacy providers.
“We do spend a lot of time reviewing existing trusts,” she told me.
“Disrupting the apple cart is not our first goal, but sometimes we get a client who just isn’t happy no matter what the trustee does, and then that money has to move.”
While Schwartz is happy to work with trust companies that won’t let Pillar manage the underlying assets, other wealth managers are wary of referring their clients to a potential competitor.
“They’re afraid that giving a Wilmington or a Glenmede custody of the assets means the next call their clients get will be from a Wilmington or Glenmede investment advisor,” says Antony Joffe, whose public trust company Sterling Trustees markets to lawyers and accountants as well as RIAs.
Some trust companies get around this potential conflict of interest by only working with directed trusts and other arrangements that kick the investment responsibilities (and fees) back to the referring advisor.
Sterling doesn’t quite do this—Joffe reserves the fiduciary right to fire managers even if they brought in the account in the first place—but plenty of other direct-trust-only providers do.
“We don’t compete with the intermediaries,” Reggie Karas, who runs Millennium Trust’s alternative asset business, told me.
“We’re a very plain vanilla service provider by design so we can better build our business in partnership with them,” she added.
In fact, a really successful influencing relationship is always going to be a two-way street, Robert Testa says.
Trust companies get the accounts, while influencers get the opportunity to prove their value as a one-stop source for all their clients’ needs—and sometimes even get prospects of their own passed back along the chain.
“Reciprocity is crucial,” he told me. “A trust company with a preferred relationship with an estate planner can suggest that person when trust documents need to be modified,” he added.
“A lot of clients who are missing a piece of their own professional advice network are at a loss. A suggestion goes a long way to getting the best outcome for everyone.”
Posted by: Scott Martin, senior editor, The Trust Advisor. Steven Maimes contributed to the research and the editing