Unlocking Real Value Blog

What Type of Wealth Manager Are You?

Every quarter, Cerulli Associates partners with IMCA to produce a research piece of interest to the industry. The latest is entitled “Understanding Wealth Managers: Practice-Type Analysis.” The study differentiates advisor/wealth manager practice types that exist today. Categories generally vary by the amount of advice offered that is not directly related to investment management. In general, the more services you provide above and beyond traditional investment management, the more sophisticated and wealthy the clients that you are serving.

Are these categorizations perfect? No. Are they always adapting? Yes. The lesson to be learned here, however, is to get a general idea of whether your practice and your resources match your target audience and your business plan. If there are mismatches, there is no time like the present to make some adjustments.

Cerulli’s categories – from least comprehensive to most are:

  • Money managers – desire to be valued solely on their investment performance
  • Investment planners – work with investors larger financial needs on an as-needed basis – typically would use modular planning tools
  • Financial planners – strive to deliver comprehensive financial advice, but still many clients do not receive comprehensive financial plans
  • Wealth Managers – additional services included to meet the wider needs of high net worth individuals, including philanthropic giving and concierge-type services

Which type of advisor are you? Now, here are some of the results of the study to see if your practice is in sync:

  • The percentage of fee-based business is higher as you move up the scale from money manager to wealth manager, as wealthier clients are more likely to understand the-based arrangement and are used to paying that way
  • Wealth managers tend to work in team practices and provide either in- or out-house resources for the specialized and more sophisticated services that they provide (advanced planning and wealth preservation)
  • Wealth managersĀ utilizing a holistic approach are more likely to be the Alpha advisor
  • Wealth managers are more likely to have larger books of business – fewer clients with larger amounts of assets

And last but certainly not least – wealth managers are more likely than other types of advisors to get referrals – from either clients or other professionals. On average, according to this report, 55% of the new business of wealth managers comes from referrals.

All in all, these results are very interesting. While there is compelling evidence to strive to become a wealth manager, it’s important that you make sure that you have the capabilities, finances and resources to do so. If not, create your own compelling reason for choosing the type of business that you become. There is enough room for advisors to be successful in a number of ways – but it’s always good to know what the competition is doing.


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