Asset Allocation Ranges

Other Improvements in the Asset Allocation Area

• Asset Class Groups
  • Add new asset class groups
  • Group labels may be changed
  • Colors of asset class groups may be changed to reflect display within the pie chart
  • Asset classes may be moved to different groups
• You may override the calculated historical return or standard deviation for an asset allocation model even if no custom asset classes are used

Improved list of existing IPSs

• You can quickly identify the IPSs that are standard vs professional

Template Management Improvements

• You hand-pick the templates to which you wish to apply (sync to) a particular paragraph
• Header/Footer customization was added to standard templates as well

New Verbiage Available For Your Review and Import To Your Current Templates

• Executive Summary
  • Removed duplicate “Asset Allocation” title
  • Adjusted expected return tokens in Profit Sharing template
• “Asset Classes to be included” under “Diversification and Investment Constraints”
  • Added space
• “Plan Fiduciary Bond Information” -> “Overview”
  • Updated verbiage for Self Directed 401(K) plan, Pension Plan, and Profit Sharing templates
• “Investment Monitoring and Control Procedures” -> “Reports”
• Updated template sections to accommodate the new asset allocation ranges functionality
  • “Asset Allocation” -> “Portfolio Allocation, Statistics & Rebalancing – With Statistics”
  • “Asset Allocation” -> “Portfolio Allocation, Statistics & Rebalancing – Without Statistics”
  • “Asset Allocation” -> “Portfolio Allocation, Statistics & Rebalancing (Projected Returns)”
  • “Asset Allocation” -> “Portfolio Allocation, Statistics & Rebalancing (Historical Returns)”
  • “Asset Allocation” -> “Portfolio Allocation, Statistics & Rebalancing – Updated Allocations”

Investment Policy Statements (IPS)

Professional, Fully Customized 
Create and Manage your IPS, QUICKLY and EASILY

Please Visit the IPS AdvisorPro® EXHIBIT BOOTH to learn more!

WHEN: October 26-29, 2010

WHERE: Boston, Massachusetts

We Hope to See You Soon!

IPS AdvisorPro®, a comprehensive online platform for the creation and management of Investment Policy Statements, will exhibit at the ABA Annual Convention, Business  Expo & Directors’ Forum. 

Find out why an increasing number of bank/trust companies have chosen the cutting edge technology of  IPS AdvisorPro® for producing highly professional, fully customizable Investment Policy Statements (IPS).   

Please visit us at Booth #418 for information about how IPS AdvisorPro® will standardize your Institution’s  process.

WHEN: October 17 – 20, 2010

WHERE: Booth #418, ABA Annual Convention

Hynes Convention Center

Sheraton Boston, Massachusetts  

IPS AdvisorPro® is exhibiting! 

Professional, Customized INVESTMENT POLICY STATEMENTS
~ created quickly and easily with IPS AdvisorPro® ~

Please visit booth #120 to find out how to Systematize the creation & management of your IPS process! 

WHEN: October 9 – 12, 2010

WHERE: Booth #120
Colorado Convention Center, Denver Colorado

“Great information and so timely as advisors reevaluate their philosophies and processes in light of  the financial crisis.  I think more and more will come to understand that best practices also make good business sense.  Thanks so much for your work and raising the bar!”

Thank-you for your support!

Banks In Wealth Management – Is Now The Time?

Charles Paikert

Editor in New York – Family Wealth Report

The proverbial window of opportunity for bankers who want to be in the wealth management business has never been wider.

And bankers can’t say they haven’t been alerted: the seize-the-moment theme was repeated throughout last week’s American Bankers Association’s annual Wealth Management and Trust Conference in Phoenix, both from the podium and on the exhibit floor.

In fact, the conference began with the keynote speaker exhorting bankers to “switch to offense this year.” 

Click here to download PDF of article

“A lot of consumers are disenfranchised, and there is a big wide-open door right now,” said Charles “Chip” Roame, managing principal for San Francisco-based Tiburon Strategic Advisors. “This is as good as it gets for client acquisition.”

“This is a phenomenal opportunity for local banks to bring in new business that they haven’t had before,” agreed Richard Aguiar, director of business development for the community and local bank market for outsourcing giant SEI.

Advantages for banks

What do banks, especially local and community banks, have going for them right now?

“We’re a part of the community and a known quantity,” said James Szewc, vice president and senior trust officer for First Keystone National Bank in Berwick, Pa. “We are very well positioned for wealth transfers.”

“Banks really do have trusted relationships, especially local banks,” said Mr. Aguiar. “They haven’t changed their stripes, and that is reassuring.”

And in the wake of the financial crisis, banks that didn’t get into trouble have emerged with enhanced reputations.

“Their biggest advantage is their perceived stability,” said Jeff Davis, a Nashville-based banking analyst for Guggenheim Partners. “That counts for a lot in a time of economic insecurity.”

Banks also have an advantage as fiduciaries, maintained  Dave Coffaro, chief fiduciary officer and head of trust and fiduciary services for Wells Fargo Wealth Management.

Emphasizing fiduciary values of prudence, loyalty and risk management were the keys to  leveraging bankers’  potential competitive advantage to get more wealth management business, Mr. Coffaro told the ABA Conference attendees.

“The opportunity has never been greater than it is right now,” he said.

Nor should a banks’ existing customer base be overlooked, said industry veteran Craig Madsen.

“Banks still have a lot of clients,” said Mr. Madsen, who was a senior vice president and managing director at Union Bank in Los Angeles before becoming a consultant in January. “And it’s easier to sell a second product than a first.”

Banks’ ability to lend is also seen as a lynchpin of future success.

“When the economy comes back, they will have the ability to lend and others can’t,” said Linda Lubitz Boone, a wealth manager who also sells investment policy software to banks as co-founder of IPS Advisor Pro. “That’s their big ace in the hole.”

“It’s harder to lend now,” said Mr. Davis, “but when it returns, this is where the money is going to be made.”

Headwinds for banks

And what kind of headwinds are banks facing?

One of their biggest challenges is the lack of a sales culture and a willingness to pay market rates for top wealth management talent, say industry observers.

“Bankers’ biggest problem in wealth management is competing against RIAs who are more aggressive,” said banking analyst Gerard Cassidy, managing director for equity research for RBC Capital Markets. “Until they incentivize people more it will be tough for them.”

“Talent follows money,” agreed Mr. Davis. “The question is whether the banks will pay up.”

Bankers at the conference confirmed that talent acquisition was a big problem for them.

“It’s very tough because you have to pay asset managers so much money,” one banker complained during a question-and-answer session. “We wanted to hire someone, but  their salary would have been second only to the CEO.”

More regulations and compliance also worry bankers.

“We’re going to have more and they take up quite a bit of time and resources,” said Mr. Szewc. “It will be very challenging.”

Bankers are also hampered by offering a narrower range of products, according to industry observers.

“Bankers don’t have enough flexibility,” said Ms Lubitz Boone. “Wealth clients want creative solutions, and bankers can’t offer products like managed futures. They’re still just offering plain vanilla.”

In his keynote speech, Mr. Roame urged bankers to offer different types of investment products, such as low cost index funds, guaranteed income products and “hedge fund-like products.”

Time is right for acquisitions

What else do bankers need to do to capture wealth management business?

Think about acquiring an RIA firm or a team of advisors, say industry observers.

“You should switch your talent focus to acquisition,” said Mr. Roame. “There are tons of firms for sale, and they come with clients and assets.”

“As the market recovers, there will be great buying opportunities,” according to investment banker, Dan Seivert, chief executive and managing partner for Echelon Partners .

The recent dislocation in the markets has produced “the biggest bumper crop of [available] talent this industry has ever seen”, Mr. Seivert told conference attendees.

Bankers who do buy or partner with an existing wealth management firm need to be cautious about the cultural differences in the firms, he warned.

“The key to successfully integrating wealth management into banks is the less integration the better,” Mr. Seivert said. “Let them leave their name on the door, let them keep their compensation structure. They’re coming from a very different place.”

Referrals key

Bankers also need to better leverage client referrals, industry executives say.

Noting that referrals consistently account for over half of new wealth management business, Mr. Roame urged bankers to launch proactive programs for asking for client referrals.

Bankers agreed.

“We need to exploit bank channels more,” said Mr. Szewc. “We should use existing trust customers for referrals.”

While bankers need to “tell their story better,” said Wells Fargo’s Mr. Coffaro, that doesn’t mean more marketing or advertising.

“The best marketing is the people in this room,” he said, referring to the bankers at the conference. “They know the story and need to tell it convincingly to anyone who will benefit.”

Trusts also need to be better leveraged by bankers who want more wealth management business, Chris Heilmann, managing director and fiduciary solutions executive for U.S. Trust said in his closing remarks at the conference.

“A trust needs to be better positioned as a modern product,” Mr. Heilmann said. “The platform must have relevance.”

“Clients lack awareness of the depth of service around trusts,” he concluded. “We need to be doing a better job talking to clients who need solutions.”

February 1, 2010

Norman Boone has an impeccable resume. Founder and president of Bay Area-based Mosaic Financial Partners, Boone earned his CFP certification in 1984 after an undergraduate degree from Stanford and an MBA from Harvard. He served in the first class of directors elected to the national board of the FPA. And he has been included as one of America’s Best Financial Advisors by the Worth/Robb Report every year since the list’s inception in 1994.

A PDF version of this article can be downloaded  here.

THE IPS EDGE

But it’s not his credentials that set him apart; it’s his flair for innovation. In addition to managing Mosaic, which has offices in San Francisco and Lafayette, Calif. Boone, with spouse Linda Lubitz Boone, founded IPS AdvisorPro, an online software application that helps advisors create customized investment policy statements (IPSs). Lubitz Boone has her own Miami-based advisory practice, which provides Boone with additional ways to serve East Coast clients.

IPS AdvisorPro facilitates two crucial functions for advisors. First, it helps them comply with the law. Second, it enhances and clarifies the mutual understanding between client and advisor. Quips Boone: “Well-crafted investment policy statements help clients avoid surprises and help planners avoid lawsuits.”

Today, IPSs are considered a best practice. “What many busy planners fail to recognize is that these IPSs are legally mandated for virtually all fiduciary relationships, including qualified plans, irrevocable trusts, endowments, charitable trusts and foundations,” Boone says. His own clients include several endowments and corporate retirement plans.

While there is no legislation mandating an IPS for individual clients, Boone notes that, in some districts, the SEC is asking to see the IPS between particular clients and their RIA. He suspects that the IPS will increasingly become a factor in audits of client records.

TAKING IT HOME

Boone’s IPS software has helped him streamline his own practice, limiting liability, providing clarity for clients and simplifying compliance. His firm manages over $335 million for 200 clients with average investable assets of $1.7 million. Mosaic and its staff of 12 are strictly fee-only. The firm charges 1% of the first $2 million in AUM, 0.7% of the next $3 million, 0.5% of the next $5 million and 0.3% on assets above $10 million. The minimum annual fee for clients is $15,000. In addition, new clients pay a first-year planning fee that typically runs anywhere from $8,000 to $20,000, based on projected time requirements and hourly rates.

The first-year client experience is thorough. New clients attend a series of two-hour meetings that cover over a dozen topics. For clients with over $1.5 million in AUM, there are no additional financial planning fees for ongoing planning beyond the first year.

Each client has a unique IPS, and the investment philosophy emphasizes low- cost, well-diversified passive strategies, spiced with a few actively managed funds and alternative investments. In general, Boone prefers ETFs to index funds.

NEW IDEAS

Boone is pushing the envelope in two new areas. He’s seeking to merge with other firms to take advantage of economies of scale, specifically excess capacity in Mosaic’s investment department. The firm also built out its administrative infrastructure, positioning it to manage the business side of a larger combined firm.

Boone’s growth target is $500 million in AUM by 2011 and $1 billion by 2014, either through new client acquisition, new advisor hires or M&As. In the meantime he launched the Mosaic Family Business Center to assist multigenerational family businesses with strategic planning, business succession and leadership training. “We have the privilege of creating more effective methods to help our clients achieve their goals,” he says. “We’re fortunate.”

Jim Grote, CFP, contributes regularly to Financial Planning.

The new features include

• Compare a paragraph of your template to the latest version in the default IPS AdvisorPro® template
• Add a paragraph to all your IPSs
• Remove a paragraph from all your IPSs
• Restore an IPS to its original verbiage as configured by template
• Add new or pre-existing paragraph to an IPS

For instructions on how to use this functionality please refer to our HELP MANUAL. Additionally, please take a few moments to view the video below that will provide a visual illustration of the new functionalities. For better visibility, you can click “Full Screen” in the video player. If you have any questions please do not hesitate to contact our Help Desk at support@IPSAdvisorPro.com.

As always we thank you for your continued support of IPS AdvisorPro® and would like to remind you that we appreciate and value your feedback. If you would like to provide feedback and/or suggestions regarding this improvement or others you are interested in then please contact us at support@IPSAdvisorPro.com.

We wish you a Happy and Healthy holiday season!

The IPS AdvisorPro® Team

1.    Help render appropriate advice in a post-Black Swan Era
2.    Help advisor regain client confidence
3.    Help advisor rebuild or win new business

Thirteen (13) sessions held during the Practice Management Summit included, but was not limited to, the following:

• Investment Management Consulting in the 21st Century: Craft or Trade? Ron Surz, President, PPCA
• To Be or Not To Be: Fiduciary Landscape Under Regulatory Reform; Kristina Fausti, Director of Legal and Regulatory Affairs, fi360
• Using Public Relations to Turbo-Charge Your Marketing Plan; Marie Swift, President, Impact Communication
• Dynamic Asset Allocation: Rx for a Post-Black Swan Era; Rex Macey, Chief Investment Officer, Wilmington Trust
• Providing A Comfortable Ride for Your Clients (and Your Practice); David Loeper CIMA, Wealthcare Capital
• In Search of Manager Alpha: Does Active Management Still Make Sense? Larry Sinsimer
• The Value Gap: In Search of Advisor Alpha; Steve Barger, Consulting Partner, Advisor Solutions Network
• The Art of Conversation: Your Leading Advantage; Lewis Walker, Founder, Life Transitions Advisors
• Rebuilding Your Business and Managing Client Expectations with Investment Policy Statements; Norm Boone and Linda Lubitz-Boone, IPS AdvisorPro®
• How Personal Legacy Planning can Differentiate Your Practice and Drive Your Production; Mark Colgan, President / Plan Your Legacy
• Audio recordings and speaker presentations are available at www.asn360.com.agenda.asp