Wealth Management Today

Michael Hull, senior vice president-Investments for Citigroup Institutional Consulting, talks with Madison Magazine about the team approach to financial advising. In 2004, Hull was named one of ten outstanding brokers by Registered Rep magazine.

How is the Citigroup team organized? We were formed initially by taking the twenty six most experienced institutional consultants (and our resulting staff) from Smith Barney (now called Citigroup Smith Barney). We focus on the more sophisticated issues of the institutional marketplace as well as what the market calls the ultra-high net worth individuals. I have a team of ten individuals covering areas of specialty such as foundations and endowments, ERISA, public funds, insurance companies, etc.

What does the financial planning world look like right now? Financial planning for both individuals and institutions has become increasingly complex. It isn’t just planning for a secure retirement anymore. Most of those calculations could be done with a simple time value of money table or a financial calculator. These days we are facing some very complex issues such as intergenerational wealth transfer, ever-changing estate tax, income tax on qualified plan distributions, transfer of liquid assets, such as multiple residences and art, charitable giving intentions, legal trusts, family limited partnerships, and the transfer of privately held or family businesses. Outside the traditional financial and legal concerns there are also emotional and financial responsibility issues, where in some cases vast wealth will pass from wealthy parents to their children or grandchildren who are emotionally and fiscally unprepared to accept such wealth.

Describe the team approach to financial planning? A sole practitioner often finds himself or herself unprepared to address all these concerns. Financial firms recognize this, and have been supportive of the team approach. Firms encourage advisors with complimentary skills to come together and advise clients using their combined talents. This leads to a more robust relationship, which provides more complete service to a client.

Why is it good for investors and for planners? All firms recognize that the better the client is served, the more likely they are to not only continue business with their firm, but consolidate their business at a single firm. The belief on both the client’s and firm’s part is that by finding a single point of contact for their financial advice, clients will reduce the time they spend managing their wealth, and spend more time on what that wealth is supposed to accomplish ... a richer life with their family or community. The team approach is good for everyone. It provides better and more complete advice for the investor. Without exception, advisors who work in a team and leverage off each other’s skills have clients who consolidate their investments with a single firm. The clients tend to have greater assets, and I believe it allows the advisor to charge lower fees. Industry studies also indicate that advisors who work in teams bring in higher revenue for their firms, and hence are better paid.

Why is the team approach so prevalent now? The team approach has been coming for years, but a few factors have led to its popularity now. The baby boomer generation is facing an enormous inflow of wealth from the previous generation. Baby boomers have not always been treated kindly in the press and have been typified as spendthrifts. However, the previous generation, many of whom remember the Depression, have been very good savers. While no one can accurately predict the wealth that is about to transfer to the younger generation, the expectation is that it will be significant. Almost all financial firms have adopted the language of “wealth management” as opposed to financial planning. This is to signify their more complete approach to the planning need.

Talk about how academia is involved in this industry right now. The need for robust financial education has not escaped the University of Wisconsin, which is addressing the need head on. They are in the process of creating the “Center for Financial Security,” an interdisciplinary center drawing from the resources of many schools, such as Law, Business, Human Ecology, and Economics. Their mission is simply to improve consumer financial management. Human Ecology already offers the Certified Financial Planning program, but in addition the center will investigate offering a graduate certificate, as well as executive education targeting the financial advisor community. Consumers are demanding well-rounded, complete advice, the industry is responding with a team approach to wealth management, and academia is right there to back us up. Robert Gutsche Jr. is a contributing writer for Madison Magazine.

Madison Magazine - December 2006
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