As a focal point of national and global leadership, Washington is full of high-achievers. That atmosphere forces financial advisers to raise their game, as well.
“Washington is a global capital, and as a result, it draws people who are extraordinarily well-educated and earn good incomes and have or are able to accumulate wealth,” said Leighton P. Roper Jr., owner of Net Worth Advisory Services in suburban Arlington, Va. “These people are not interested in simplistic strategies and investment approaches. They expect some sophistication from their adviser to shape their [financial] outlook and lives.”
Clients in the region could include a senior executive in a federal agency, a military officer, a key Capitol Hill staff member, a lobbyist or a diplomat. Advisers have to have a feel for the influence — real or perceived — that the client exerts.
“Power has a lot of cachet around here; it opens doors,” said Lisa A.K. Kirchenbauer, president of Omega Wealth Management LLC in Arlington. “You could get by with less money [in Washington], but not with less power. You have to understand how clients see themselves, and be sensitive to that.”
Helen Modly, executive vice president of Focus Wealth Management Ltd. in Middleburg, Va., calls the region “the pulse of the whole country.”
“The D.C. metropolitan area has a certain energy to it,” she said. “As an adviser, you have to stay very, very current.”
Although the federal government is the most prominent employer in the Washington region, the economy also features a high-tech corridor in Virginia near Washington Dulles International Airport and a growing biotechnology industry related to the National Institutes of Health. Marriott International Inc. and the Northrop Grumman Corp. are among the businesses headquartered in the area.
AFFLUENT CLIENT BASE
Of course, there are other government contractors, as well as lobbyists. Each of the sectors tends to feature well-paid practitioners.
“The Washington metro area boasts the highest median household income in the nation,” according to the PNC Bank Greater Washington Market Outlook. “The workforce is extremely well--educated and attracts well-paying employers.”
Nearby in Virginia, the average household income is $119,134 in Loudoun County and $105,797 in Fairfax County, according to census statistics cited in a recent analysis published by The Washingtonian magazine.
The publication also said that 53% of people in Washington, D.C., have a bachelor's degree or higher, while the percentage soars to 70% just across the Potomac in Arlington. This compares with a national average of about 30%, according to the U.S. Census Bureau.
The metropolitan area of 5.6 million is target-rich for those advising high-net-worth individuals.
“Virtually anybody you deal with has a chance of being a good prospect as an investment management client,” Mr. Roper said.
The evolution of Washington beyond a government town helped the local economy survive the recession better than other U.S. communities. The unemployment rate is 5.5%, compared with about 7.9% nationwide. Although housing prices dropped by 27% from a peak in 2006, they're now perking up, according to the PNC report.
“Because of the area's mild recession and steady recovery, the foreclosure rate has been below the national average, limiting downward pressure on prices, and above-average population growth has helped clear excess inventories,” the PNC report stated.
Although government contractors are worried about the effects of more than $600 billion in tax increases and federal spending cuts should the U.S. fall off the so-called fiscal cliff, the region has some cushion to absorb the blow.
Over the past year, the federal government in the Washington area has shed 3,000 jobs, while professional and business services have gained 11,000, the education and health sectors added 13,000, and the hospitality industry produced 5,000, according to the George Mason University Center for Regional Analysis.
“We have a diversified portfolio of income sources in the Washington area,” said Barry Glassman, president of Glassman Wealth Services LLC in McLean, Va. “That helps to weather a lot of the sector downturns.”
The economic resilience also can be seen on the individual level.
“There are likely more double-income couples who have the ability to earn income in a professional manner here than in other regions,” Mr. Glassman said.
If the country falls off the fiscal cliff, it may not be devastating here.
“Even if [the government] shrinks by 5%, it's still a lot of money flowing locally,” Mr. Glassman said.
Adding to the revenue stream is the high-tech sector that has developed over two decades. As you drive to Dulles Airport, among the names you see on the buildings are Siemens, Oracle and Unisys.
Jon Yankee, a partner at Fox Joss & Yankee LLC in Reston, Va., has many clients who are software company entrepreneurs.
“They need our help because they're too busy building their own businesses,” he said.
The tech ferment is “great for the region, it's great for jobs, it's great for financial advisers,” Mr. Yankee said.
What's not good for anyone is the traffic. Washington consistently ranks among the top two or three areas in the country in vehicular congestion.
“We have potential clients who are reluctant to sign on with an adviser in Middleburg because they see it as an all-day affair to get here,” Ms. Modly said.
The stop-and-go ordeal affects everything from when to schedule client meetings — between 10 a.m. and 3 p.m. — to where you practice.
“You don't want to cross bridges [over the Potomac River],” Ms. Kirchenbauer said. “You have to be thoughtful about where you put down roots.”
Location also is important when it comes to cost of living, which is about 43% higher in the Washington region than the U.S. average, according to Sperling's Best Places to Live rating.
The closer you get to the District of Columbia, the more you're going to pay for everything.
“Many of our younger employees have found homes in Reston or farther out in Ashburn or Leesburg, where it's more affordable for younger families,” Mr. Yankee said.
A family of four with an income of $120,000 would struggle, according to Ms. Kirchenbauer.
“It doesn't go very far, and it probably means you're living pretty far out — and that brings in the whole traffic thing,” she said.
HOTBED FOR ADVICE
Despite the challenges of daily life, the DMV — the District, Maryland and Virginia — has become a hotbed for the investment advice business.
“The sheer number of [registered investment advisers] is expanding rapidly in the Washington area because of the opportunity,” Mr. Glassman said.
The education and sophistication of clients means they place a higher value on the fiduciary standard of care that investment advisers must provide, according to Don Rembert, president of Rembert Pendleton Jackson in Falls Church, Va.
“They like the fact that we're on their side of the table,” Mr. Rembert said. “They're much more savvy about that kind of thing.”
A native of the region, Ms. Modly says she will never leave.
“I can't imagine working in a better area,” she said. “If they could just give us a flying car.”
mschoeff@investmentnews.com Twitter: @markschoeff
