Charlotte Beyers new book, Wealth Management
Unwrapped, gives affluent families plenty of tips on
managing their finances while focusing on the quality of their
lives. Using vivid examples and infographics, the plainspoken
Beyer lays out the pitfalls to avoid when choosing advisers and
making other decisions that will impact future generations. A
financial industry veteran who in 1991 founded the New
Yorkbased Institute for Private Investors (IPI), whose
members include some 1,200 ultra-high-net-worth individuals in
18 countries, she also knows what investors
look for in a wealth management professional.
Beyer spent two decades with Wall Street firms including
Bankers Trust Co. and Lazard before launching IPI. In 2004 she
founded the Investor Education Collaborative, an online
venture inspired by her work in helping establish the Private
Wealth Management Program at the Wharton School of the
University of Pennsylvania and developing similar programs at
other colleges. Beyer recently shared her views with
Contributor Andrew Barber on how advisers can build strong
Institutional Investor: In Chapter 1 you focus on a
question that investors need to ask themselves as they select
an adviser: Who is brave enough to tell a customer,
Youre wrong? Wealth management is a service
industry, so making such a statement requires tact. How do you
recommend that advisers approach this?
Beyer: You are right; most advisers will
defer. And yet as one investor put it, Many advisers are
reluctant to tell the truth as they see it to their clients.
Advisers are afraid of upsetting their clients and so
dont ask hard questions or urge clients to do something
that their clients are not inclined to do. Although this lack
of candor may be an understandable human characteristic, it is
not especially helpful to us.
A more candid and open dialogue about the inevitable
disagreements the adviser and the client will encounter
before they actually occur will help avoid any
unpleasantness down the line.
Your second chapter contains an invaluable
discussion of what turns people off about their advisers and of
how people feel about the role that wealth plays in their
lives. How can advisers help their clients put money in
perspective so they can make the correct decisions for them and
focus on living life?
Wealth is uniquely personal, and what you want from your
wealth changes over the course of your life. The question about
the purpose of wealth is answered in different ways; sometimes
years of seeing security as paramount may disappear when the
investor finally recognizes there is enough to leave a
meaningful legacy. The successful adviser makes no assumptions
about correct decisions because he or she could risk alienating
the client. One investor may love poring over investment data
and portfolio analytics, while another wants to talk about
anything but investments. Thus a focus on living life can take
surprising twists and turns.
I recall one situation where the client was disturbed
because the adviser kept trying to persuade him to be more
systematic in his philanthropy. What this individual, rightly
or wrongly, enjoyed most was giving money to his friends
charities. The quid pro quo over decades worked for him.
You mention jargon in a negative context frequently
throughout the book. Would you advise a wealth manager to
dispense with jargon entirely and be more direct?
Jargon can be something to hide behind, often representing
an imbalance of power, and that can never work well if you are
trying to build a lasting partnership. Language should not
separate but rather foster a mutual understanding. Any real
communication requires the receiver to grasp what is being
said; otherwise the communication has delivered nothing of
Should advisers be more direct? Maybe, but maybe not. Direct
can often fall into condescension or pedantic repetition.
Perhaps a more precise approach would be clearly explaining, or
teaching, finance and investing at the level understood by the
You note the growing practice of adding personal
certifications to titles, pointing out the difference between a
CFA and a designation with a much lower bar. How should an
adviser represent education and other credentials?
If an adviser explains clearly what he or she does for a
client, specifically outlining the investment policy statement,
outcomes and how together they will determine risk targets, the
adviser can weave in the credentials that aid in that process.
Expertise is best proved not by letters of the alphabet behind
your name but rather by illustrations of how the expertise is
actually used to benefit a client.
The Monte Carlo exercise is a powerful way to walk though
possibilities with a client, describing the impact of market
gyrations and testing out how much risk is comfortable. Show,
rather than tell, your expertise with engaging exercises and
You advise investors to ask for references. Should
advisers be proactive on that front?
Advisers who hand prospects a list of questions to ask any
adviser they are interviewing will have a competitive
advantage. Will you supply references? is an
obvious question to include on that list. Prospects appreciate
an advisers guidance, and when an adviser goes so far as
to suggest interviewing other firms, this underscores the
advisers confidence in his or her own expertise.
When a client decides to fire their wealth manager,
how do you suggest the adviser handle the
The story I tell in my book begins right after the financial
crisis. One investor was furious with his adviser because he
lost a lot of money. Heres how the investor described
what happened next: What had most annoyed me was not
seeing a context for evaluating my performance. By asking the
question and stating my complaint, I found my adviser was able
to refine the reports, giving me a frame of reference to
evaluate my returns objectively. I could compare my returns and
risk against other portfolios, and in that context, I saw my
returns were pretty impressive. Now I feel confident and
comfortable that my adviser is doing a great job for
Now, you might ask, why didnt the adviser do that
without almost being fired? In my view, advisers often learn
from their most demanding clients. The enhancements needed are
usually being voiced by at least one client, if only the firm
When an adviser feels that a client is not a good
fit for his or her services during an initial meeting, how
should they handle it?
Diplomatically. You might explain how your firm wants to
exceed a clients expectations in servicing and
performance, and that from this meeting, you sense that your
firm might disappoint them.
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