Wealth management firms tempted to add new services should begin by assuring themselves that any new services add value without draining resources, a panel of experts said Tuesday.
While new technology, services or marketing approaches can attract new clients and better serve existing clients, advisers need to provide those services professionally, and do so only when they support their overall strategy, according to three practice management experts, advisers Wesley D. Bigler and Jim Harris, as well as consultant John Anderson, who shared their guidance during an InvestmentNews webcast, “How to Add Profitable Services to Your Business.”
Check out more on adding profitable services to your business. Click here to listen to the archived webcast.
Mr. Bigler decided not to add an accounting and estate planning practice to his firm, Atlanta-based Longview Wealth Management LLC, after finding that it was unlikely to be very profitable or worth the effort.
While having those professionals on site can draw additional revenue and referrals to the business, advisers also end up dealing with management issues when they add employees, Mr. Bigler said.
Instead, he said that he brings outside lawyers and accountants to his office for joint meetings with clients who need advanced estate planning and tax management services. At the meeting, the client and the adviser receive copies of the trusts, wills and other documents that have been prepared.
“Then they leave my office, and I'm glad that they're gone,” Mr. Bigler said of the lawyers and accountants.
Most advisers will consider smaller additions to their firms than bringing major professional services in-house, but they should still engage in a systematic process before adding client seminars, newsletters or videos, according to Mr. Harris, president and founder of Financial Practice Management Corp, a Marietta, Ga., based consulting firm.
Mr. Harris said that he developed a series of questions that planning firms should answer before adding services.
“The very first thing you want to do is ask yourself: Do I have the capacity? The knowledge? The skills? Or can I acquire those?” he said. “And then secondly, if I do that, can I monetize it so I can do it profitably?”
Pricing those new services can be tricky, Mr. Bigler said, noting that he has experience with several fee models — and sometimes has not charged his clients for services he provided.
Mr. Anderson, head of practice management solutions at the SEI Advisor Network, stressed that advisers should only add services that are relevant to specific client needs. For example, he said business owners need access to tax services, credit and valuation services that a normal retiree would not. Education planning, elder care and consultation with defined-contribution plans may also present opportunities for advisers to branch out.
“If you pay attention … your clients will tell you what they need,” Mr. Anderson said.
