A Wealth of Opportunity

By Eric Butterman

To call the beginning of 2020 a crisis would be an understatement. In times of crisis, customers look to their financial advisers for guidance and reassurance. And with the year’s whipsawing markets, health fears, vaccine hopes and waves of economic shutdowns, clients needed an extra dose of support. Michael Kim, chief client officer for AssetMark, a turnkey asset management platform, reminds banks that clients need experts to understand and help them wade through confusion, dealing with not just financial effects of the pandemic but also the state it may have put them in.

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But what may have surprised some in February and March’s turbulent days is that the outlook for the wealth management and trust business is as robust as it is today. Despite the challenges, 2020 has been a year of strong business activity for clients of First Citizens Bank, a regional bank based in Raleigh, North Carolina, says Gene Lewis III.

“We remain incredibly committed to the wealth management space. The pandemic has had its challenges but there have also been opportunities for clients,” says Lewis, who is SVP and managing director in the trust division. “Client retention even in the midst of this new norm was strong, and they are more dependent on advice—seeking more proactive counsel while there is sensitivity and concern about the investment markets. Most of our clients are long-term investors and our advice has been to stay the course unless something has fundamentally changed in their business. Overall, business is solid, and it’s validated the continued commitment to wealth management as a driver.”

He found clients greatly valued communication from executive leadership in the asset management area. “The key was to calm clients, and we did this using everything from conference calls to written materials updating clients on what had occurred but more importantly how it impacted our forward-looking capital market assumptions,” Lewis says. “I can count on one hand the amount of people who said, ‘I’ve got to go to cash,’ which for us validated the fact that communication advice and counsel is really what people are looking for. When the market is on an absolute tear and it’s a dart game then clients are not as sensitive to it. When things are challenging, that’s when the rubber really hits the road and our value shows in this other way.”

With a meaningful share of their clients being business owners, they actually have seen there has been a chance to prosper through mergers and acquisitions. “What has transpired is an assessing of whether this is actually a good time for an exit strategy for small business owners,” he says. “Valuations actually remain strong in many businesses and we’ve seen quite a few liquidity events.”

Digital acceleration in wealth

One area that the pandemic has brought to the forefront is technology. Dave Coffaro, a former bank wealth management executive and principal of Strategic Advisory Consulting Group, says the syntax and tools are being utilized to engage effectively and broadly. “In the retail bank arena, they are using lots of digital tools, but it’s translating better now in the wealth arena,” Coffaro says. “Digital tools are using information on investment accounts and there is the ability to access all the information, daily aggregation tools becoming more popular on platforms like those offered by MX and Envestnet Yodlee.

The mass adoption of video meetings applies to banks and advisers, too. “Now it’s not setting up a time to meet somewhere,” Coffaro says, “but saying let’s do 5:30 and, by the way, here’s the link.”

Coffaro says bankers are getting comfortable that security isn’t so different on a video meeting than in other formats. “You’re seeing an evolution of paradigms for institutions asking ‘Do we really need to archive everyone’s Zoom meeting?’”

Ryan Stevens, principal at financial planning and investment management firm Kutscher Benner Barsness and Stevens, says fintech continues to promise more data for clients. “And with more data comes more inertia,” he says, “so there’s a real need for wealth managers to be interpreters of that data, as well as translators of that data into comprehensive plans of action. All of this requires some nimbleness and adaptability on the part of wealth managers.”

As far as emergent client risks from the pandemic? “There are always those risks,” says Coffaro, author of the book Leading from Where You Are. “Good planning is dynamic planning. It will be about offering scenarios and a plan for them for the next three, six, nine, twelve months—and showing clients you can adapt if it turns out the forecast is inaccurate. Most pandemics are typically two years; what if unemployment keeps on that trajectory and keeps coming down and gets close to full employment by middle of next year? It’s about knowing ‘What does that mean for my portfolio?’”

In the realm of investment preferences, Coffaro says banks and advisers will need to respond to the trend of sustainable and socially responsible investment. “There are younger clients who are more apt to go down this route, and they want their wealth creation to encompass this,” he says. “You need to show this isn’t something you just started brushing up on.”

Lewis and Coffaro both emphasize other factors that clients expect their advisers not to overlook. “Assessing the effect of the pandemic can’t allow you to overlook the election,” Coffaro says. “We don’t know what effect a Biden administration will have when it comes to all kinds of financial-related situations. This could be a key factor to your client’s financial picture as well.”

With promising vaccines and other therapies now making their way to the market, it’s still hard to say whether the pandemic’s end—whenever that will be—will lead advisers and clients back into the office. If advisers are wise, though, Coffaro says, it won’t lead them back to many of their old ways. What Coffaro hears from people he talks to is about the frequency of outreach and that clients appreciate that stepping up of the personal touch.

“There’s a greater range of topics that are brought up, how more meaningful they are and the things clients want to talk about are very timely and relevant,” he says. “The pandemic has been tough but it’s brought people together—including those providing the service and their clients. Staying in touch more? That’s also good for everyone. Giving your client the message that you’re in this together is a positive not just during confusing times but really for all times. You’re here for the client.”

Eric Butterman is a freelance writer who has written for Inc., Kiplinger’s Retirement Report, Secure Computing and other major business outlets.