The River Region’s large wealth management industry is bringing the area an embarrassment of riches when it comes to expertise and advice on planning for and protecting the future while also enhancing the local economy and the community.
The picture many of us paint of retirement is a pleasant one: In it, our golden years truly shine as we spend time cultivating stress-free hobbies and spending tons of quality time with family and friends in cozy, comfortable surroundings. But without a sound financial strategy and good guidance, that view is an out-of-reach fantasy for most. It’s why retirement planning is such a big business and why the River Region has multiple choices when it comes to wealth management.
Our area’s wealth management industry includes financial services firms of all sizes and types as well as some banks, and while they all do and offer more than retirement planning (things like investments, trusts, business succession and estate plans, even loans), it’s definitely a core function and one that often involves all of the above.
The expertise and range of options available is a benefit to River Region citizens, but the industry has other positive impacts on the community too, as Larry Groce, Senior Investment Management Consultant at Morgan Stanley, outlined. “The economic impact of the wealth management industry is huge. In addition to the typical brokerage, advising, private banking, management, risk and quality support positions associated with a financial institution, I think the River Region’s wealth management industry brings in regional personnel associated with nationwide firms, as well as other professionals, who travel from all over the country to introduce different products and offerings and provide support and education,” he said. “They stay in our hotels, eat in our restaurants and visit landmarks around the city.”
Jeff Sprague, Managing Partner of Sprague Stevenson Wealth Advisors echoed Groce. “The wealth management industry provides a tremendous amount of jobs for our region,” he said. “A lot of people benefit from the industry’s large footprint.”
Edward Welch, Chairman and CEO of Welch Hornsby, shared the same thoughts. “As a whole, this industry brings great employment opportunities, and the compensation packages are great, so that’s an extra plus for the local economy,” he said. “We have been able to attract and recruit native talent, too. We need to keep bringing those folks home if the city is to grow.”
Groce also noted that he and his colleagues are highly engaged members of the community. “Most of the industry not only financially supports but is also involved in a number of organizations, including the United Way, the Montgomery Museum of Fine Arts, the Alabama Shakespeare Festival, and numerous other boards and charitable groups and societies throughout the region,” he said. “Just as one example: In 2016, the Morgan Stanley Foundation provided an $86,000 grant to the Montgomery Area Food Bank to start a school-based pantry program for some of our community’s underprivileged children.”
George Smith, Principal at Jackson Thornton Asset Management, agreed. “We are about to celebrate our 100th anniversary, and for the last century, we have been avid supporters of the arts, the MMFA, ASF and the Montgomery Symphony,” he said. “We also assist some of these places with their own financial plans.”
And when wealth management professionals do their jobs well, they help our region’s people protect and grow their wealth, meaning they can better give back to the community. “With today’s complexities in finance, including tax laws and a lot of changes in those laws, having a wide range of professionals focusing on wealth management in the area enables individuals to better manage their finances and wealth,” Smith said. “These professionals help individuals and businesses understand retirement plans and the benefits of saving, and that makes a community better and stronger overall.”
The Right Fit
Choosing the right person to provide wealth management guidance is crucial, and according to Jonathan Shoffner, a financial advisor at Edward Jones Investments, that’s another reason the industry’s range and depth in our area are such pluses. “When it comes to wealth management, you need to be really comfortable with whomever you are working with,” he said. “And sometimes it’s as basic as personalities not meshing, so having a lot of different people to choose from is great.”
For Shoffner, educating his clients is key to earning trust and creating an environment where they feel secure. “I love teaching others how this stuff works, and it’s important because it’s not something you really learn in school. There is a lot of noise out there in the financial world, so it’s important to have someone who can decipher and balance that for you,” he said.
Sprague elaborated on the point, stressing that multiple options mean increased competition. “Having such a large wealth management industry here leads to a better client-advisor relationship,” he said. “We all know that there is someone else just around the corner, so if we don’t provide a good experience, our clients can go elsewhere.” Competition also helps keep the industry’s costs down, which is a big positive for clients.
Competition may push wealth management professionals to do their best, but so do advances in technology. Today’s clients have easy access to massive amounts of data. They are demanding better service, faster. They also do comparison shopping. “Consumers are more and more aware of the costs in their investments,” Smith said. “That’s bringing lots of changes to the industry as we all work to lower the costs of our services.”
One related result is the move to a fee-for-service model where client fees are based on the level of assets managed as opposed to a commission-based model. It’s one that Welch and his firm have been using for a while. “As registered investment advisors, we aspire to be true fiduciaries for our clients, and we set up a model that we felt aligned with our clients’ interests,” he said. “Consumers saw real value in that, so now the rest of the financial services space has begun to emulate that. In this framework, a client’s expenses and fees and their portfolio are much more transparent, and it’s more cost effective.”
Groce, who’s been in the industry for 33 years, highlighted the huge effects technology has had just on basic operations. “One of the biggest industry ‘disrupters’ would be the transition into the digital space,” he said. “I remember back in the early ‘80s, paper was so voluminous that the offices would have to close for half a day just to get caught up. Thirty years ago, when you sold a stock to a client, you had to handwrite a ticket, walk it to the wire operator, who then wired the order all the way to the exchange for an execution. There’s still a lot of paper today, but we are rapidly transitioning away from that.”
Moving from strictly phone and face-to-face interaction to email and the use of mobile apps is freeing up time that wealth managers are putting to good use. “We are now spending our time advising clients, working with them to help meet their goals,” Groce said.
And quick access to a world of information is creating more educated clients, who still expect their advisors to know more than they do. “All this news and information means we are much more in tune with everything happening, but clients are too,” Sprague said. “They are so much more aware of what’s going on in the market, so we have to stay at the top of our games.”
Despite all the differences in the industry today, the basics of the business have not changed. “The way we do things is no longer the same, and the bar has been raised,” Sprague said. “But there is no technology that will ever change an essential element: the value of earned trust that only comes from real relationships.”
Communication is Key
The only way to create and maintain any meaningful relationship is with clear communication, and wealth advisors working with clients across a range of ages often have to perform a balancing act. They have to meet younger clients where they live, which is effortlessly in both the actual and digital worlds. But the approach that works for that group may alienate older clients, often still the foundation of their business.
Welch gave his take on working with millennials. “I personally have a passion for that group because I have two millennial kids. The way that generation interacts with their advisor is and will be different; it has to be, because they communicate differently,” he said. “We’ve recently brought on a few advisors in that age group, and I have a reverse mentorship with them. I ask them all the time, ‘What are y’all thinking?’ and ‘How do you see this?’”
While he acknowledges the differences, Shoffner stressed that there are common bonds when it comes to money. “Millennials and the younger people behind them are different, but the concerns are basically the same,” he said. “The 2008 recession is memorable to them, and it made many pretty risk adverse and even more conservative than some of my older clients, which is the opposite of what you’d expect.”
No matter their age, life stage or even amount in their account, people who choose to employ a wealth management professional do so for one reason: They want the peace of mind that comes from expert advice and calm counsel. With hundreds of options available in the River Region, achieving that goal is attainable.