Service Model

Wealth management can evolve naturally from a retirement planning practice—after all, what could be more logical than broadening the expertise applied to the investment of workplace retirement investments? It also can be a valuable and profitable business expansion. However, it can be difficult to strike the balance between actively pursuing clients and naturally letting the relationship evolve from participant interaction. Three advisers discussed the challenges and benefits of including wealth management as part of their business, in addition to their corporate retirement plan practices.

Based in Fort Lauderdale, Florida, Timothy Kasper, senior financial adviser at Merrill Lynch, who works with 401(k) plans and high-net-worth wealth management clients, said that having the knowledge and experience in both retirement planning and wealth management helps him when dealing with plan sponsors. “We try to sell it as a value-added benefit to an employer,” added Vincent Morris, Vice President, Bukaty Companies, a National Retirement Partners member firm in Kansas City.

Kasper said his criteria for wealth management clients are that they are “good people” and have $1 million or more in investable assets. Morris said he does not have a minimum but is moving toward a $50,000 minimum, and panelist Doug Prince, Managing Director at Stifel Nicolaus, a registered investment advisory (RIA) firm in Indianapolis, has a minimum of $500,000. Prince noted that he has a goal of reaching out to the executives at plans he advises.

The advisers said business concerns with adding wealth management to a practice include deciding when to bring on new hires, or expertise, to grow that side of the business, as well as having software to make it as streamlined as possible. Morris said his wealth management business was profitable right away. To balance new hires with profitability, Prince said, as a rule of thumb, he justifies bringing another staff member on when profit reaches $200,000.

There are other roadblocks to building a wealth management branch, such as fiduciary concerns. Prince said he has a fiduciary concern about pushing participants out of plans and into rollovers. He mentioned he would like to build up the rollover side of his business, but needs to work through these concerns first. For now, he does not push those wealth management services. Kasper echoed, “I’ll sit back and let them come to me.”