Suddenly, ‘Wealth Management’ Doesn’t Mean Anything Anymore

Bankers Shadows Wall Street

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In what could arguably be called a watershed moment in the history of the financial advisory business, IMCA, the Investment Management Consultants Association, released a white paper recently defining the practice of wealth management.Finally! After years of vague generalities, a respected industry organisation nailed it down – through their own lens, sure, and not without a healthy dose of self-interest, namely promoting their own “certified private wealth advisor” certification program.

But hey – they did it.

And they did it well, sending out a survey to 43,000 advisors (seems high, but OK), and carefully processing the 400 responses.

IMCA’s white paper includes a comprehensive overview of the market, the high-net worth clients in that market ($5 million minimum net worth), and what specialised skills and knowledge advisors need to properly service those clients.

Sometimes the white paper lapses into jargon (“knowledge domains”) and sometimes it can cause eyeballs to roll (“the knowledge required to provide competent wealth management incorporates 169 topics”), but overall it’s pretty damn good.

There’s only one problem, and it’s a big one: the phrase “wealth management” itself has become so commoditized, so diluted and so ubiquitous, that it’s now almost synonymous with “financial services.” 

Let’s be honest: “wealth management” has been nearly completely stripped of its original meaning, and its common usage simply doesn’t convey what IMCA says it means – or should mean.

Just look at all the firms that either have “wealth management” in their official name or as part of their business, as in Merrill Lynch Wealth Management, etc., etc.

How many clients of those firms have a net worth of $5 million or need half the services IMCA’s definition says they do?

Several years ago, when Citibank launched its “Personal Wealth Management” division, it was obvious that a teenager who wanted to open an account at Citi with his or her savings from a summer camp job would be considered a “wealth management” customer.

It’s as if an automobile industry association laid out specs for BMWs, but they ended up being applied to Kias.

Inevitably, the true high-end of the industry will want to distinguish itself from the hoi polloi and come up with a new name that reflects the premium services truly wealthy clients need.

For example, consumer publications targeting high income readers who buy luxury products are increasing fond of the word “bespoke” to convey really expensive stuff.

On the business side, private banks, which really do have clients that fit IMCA’s definition, may have a head start with that oh-so-exclusive sounding moniker “private.”

Some variation of “ultra,” as in ultra-high-net worth, may also be in the running.

Shirl Penney, chief executive and founder of Dynasty Financial Partners, who knows the market about as well as anyone, thinks “Wealth Advisory” will do just fine.

Or maybe Madison Avenue will come up with something entirely new.

Today’s “wealth manager” may well become tomorrow’s “affluent advancement advocate,” or “strategic resource consultant,”  suggested Ken Krimstein, a former creative director at New York advertising agencies who now teaches at DePaul University in Chicago.

“My Very Own Goldman” may also appeal to the well-heeled client, Krimstein speculated.

Don Draper couldn’t have said it better.