Financial planner as concierge

Financial planners in the US are increasingly embracing a business model which offers the kind of services you would expect from a concierge in a five star hotel.

By Benjamin Thornley, in New YorkTo win and retain clients, advisers in the US are being encouraged to think of themselves as more than just plain-vanilla financial planners. In most cases that means increasing the number of services they provide.

But while at one level advisers are embracing a more holistic planning model that might include, say, estate and tax planning and access to a vast array of investment options, at another level the extra services are decidedly more ambiguous.

For California-based wealth management specialist myCFO, those services might include leasing jets, for example. At Balasa & Hoffman in Illinois, finding a mortgage company or hiring domestic help is considered part of the job. And at Chicago's Northern Trust, customers have always been able to call their private banker to request tickets to sold-out rock concerts or any other event at the city's famous Wrigley Field.

These value-added niceties have come to be known in the US as "concierge services" - a term first coined by Florida-based Evensky, Brown & Katz president, Deena Katz.

There are some good reasons for offering them. Beyond differentiating a business and building client loyalty, they help justify an adviser's fee and shift the pricing focus away from straight investment management.

"If we don't service clients in a holistic way, they'll think all we do for them is make investments," Katz says.

She argues concierge services are less about the specific services than the seamless delivery of "what clients would like in terms of support for their lifestyle."

In Evensky's case that might mean simply a referral to a travel agent or web site recommendation.

In most cases, however, the provision of such services demands a significant investment in time and resources, while the cost of such services has to be recouped -- considerations that tend to limit their application to only the wealthiest clients.

"When you're talking about concierge services you're talking about really affluent individuals," explains Boston-based Cerulli Associates senior consultant, Dennis Gallant.

In Australia, where there are fewer wealthy clients to demand and justify such attention, one could be forgiven for thinking the concept of concierge services is redundant.

However, while planners serving the middle market cannot be expected to provide the type of family office-style services embodied in hotel and concert ticket reservations, the broader notion of adding value described by Katz, nonetheless throws out an important challenge.

For starters, middle-income earners usually receive a more commoditised model of advice with very little personal attention. Certainly that's the case in the US, but even in Australia "clients go through the tax planning and asset allocation process and often end up in a balanced fund," argues Gallant, who traveled to Australia last year as a co-author of Cerulli's extensive report on the local industry.

"For middle income clients, from my perspective it is easier to differentiate services without having to engage in non-core activities," says Arizona-based CFP CFA, Stephen Barnes.

"Clients can be very receptive to the kind of personal attention and time they feel they deserve as opposed to add on or concierge-type services. That will more than satisfy them," he says.

Katz suggests that providing concierge services may merely be a matter of having "a fast Internet connection and a smart person to run it".

"For us, it's a matter of wrapping services around the type of client you've got. Middle income clients [have some life choices] and you can wrap some services around that," she says.

"They have choices about educating children and financial aid. I know a web site that asks 12 key questions about the type of school they might want [to send their child to]. I'd send my client to that. That's a concierge-type thing. There's tons of info on the web."

Katz points to referrals as an obvious value-added service and also argues an adviser can become a buying agent, striking a deal with a CPA for cheaper tax rates, for instance.

Even planners like Barnes, who argue concierge services fall outside an advisor's core function or competencies, concedes they will "answer the phone and talk to a client about any issue they want to talk about".

Barnes gives clients legal and accounting referrals and "is proactive in all aspects of a client's life".