Wealth Management: The Company You Keep

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September 05, 2014


The latest financial cycle started more than six years ago, and many of its challenges and changes linger, from market volatility to a low interest rate environment. Some savvy investors have found that the way to yield success in both good times and in bad is to partner with a team of people who lead with insight, listen, understand and act on client needs — a holistic wealth management organization that demonstrates integrity, embraces a team-based approach and is backed by the strength of a reputable bank. That’s the very combination that clients of The Private Client Reserve of U.S. Bank experience.

 

Richard Davis, Mark Jordahl and Mike Ott recently sat down to discuss The Private Client Reserve’s wealth management approach and how it helps clients work toward their unique goals. 

 

Our Panelists

 

Navigating Volatile Markets

Davis: Before the most recent recession, many wealth managers focused solely on helping their clients grow their financial resources, and for a time, that strategy appeared to work. Just by being in the market with a well-diversified portfolio, clients likely gained over time. (TheS&P experienced an average 11.36 percent rate of return from 2003 to 2007.)  These wealth managers received a shrill wakeup call when the recession hit: Even well-heeled clients could lose their hard-earned wealth. Wealth managers suddenly  realized they should also strive to protect — not just grow — clients’ financial assets.

Richard Davis and Mike Ott; Photo by David Bowman

 

While many in the wealth management business dropped the ball, defending our clients’ wealth is nothing new to us. For more than 150 years, we’ve helped clients work toward protecting and maximizing their wealth. We believe it’s all about “dream making” in good times and “dream protecting” in tough times. The recession was a test and proved that we can stay true to our original path and not be dissuaded from what’s right for our customers and ourselves.

 

Jordahl: We manage risk every day; it’s in our DNA, and it’s reflected in how we manage clients’ portfolios. It is interesting to note that in a 2013 survey of high-net-worth individuals conducted by The Corporate Executive Board, 53 percent of those surveyed identified protecting current wealth as their top concern, above any other financial concern. When it comes to wealth management, there may be no one better at managing risk than prudent banks.

 

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September 05, 2014


Davis: That’s a great point, because many wealth managers are not a part of a bank and don’t have the protection of the fiduciary responsibility that comes with a banking institution. As a well-established and well-respected bank, we strive to first and foremost protect our clients and their core assets as we protect our own. Our safe and strong operating model has allowed us to outperform our peer group through the entire recession (as seen in U.S. Bancorp Annual Reports). We transfer that sense of prudence to our clients by virtue of the rules we keep for ourselves.

 

Ott: When the most recent recession began, customers started saying, “Wait a minute. Who’s holding our money?” They took an interest in things like debt ratings — we have strong ratings both on an individual basis and compared to our peers — quality of earnings and quality of management. Suddenly, more customers realized the value in our long history of under-writing, risk management and experience in making recommendations for investment choices.

 

Davis: This long history and prudent business management have allowed us to focus on, and invest in, the client experience even during the depths of the recession when others couldn’t. For example, we launched our first mobile Web product in 2008 and our first app in 2009. Since then, we’ve introduced a number of innovative offerings. See usbank.com, Online & Mobile Banking for more detail.

 

Wealth Management: A Goals-Based Perspective

 

Davis: We consider wealth management to be a team sport because several experts need to support working toward a robust set of wealth management goals. But it is also an individual sport in the sense that each client’s goals matter. The key is to never take our eye off the client’s ball.

 

Ott: An important element of that is our goals-based wealth management approach, which aligns a client’s lifestyle, family and impact goals with investment decisions. Instead of fixating on what the market’s doing on any given day, we try to shut out the outside noise and focus on our clients’ specific goals — whether the goal is to promote the arts in low-income schools, send children to college or plan for a secure retirement. Over time, client meetings sound more like, “Here’s what we’ve been working toward, here are the steps we’ve taken and here are the next steps along the path” — not, “the market’s up or down, for instance, 5 percent.”

 

Jordahl: With the markets and global economy, we can’t say definitively when, where or how something will happen. Today it might be a geo-political crisis; tomorrow it will be something else. The answer is focusing on goals-based wealth management, which builds portfolios for clients targeted toward their specific and differentiated individual goals.

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September 05, 2014


Differentiated Wealth Management Experience

Ott: To us, a differentiated client experience means exploring the unique needs and goals of each client and keeping them front and center. It means not being burdened by having to explain practices that may not be in the client’s best interest.

 

Jordahl: As an example, we don’t have a vested interest in using any particular investment products; we have an “open platform” that gives access to a spectrum of investment vehicles. Some wealth managers have grown up manufacturing products, and their objective is to sell those products. We grew up being entrusted with helping families — generation after generation — work toward their objectives. Our investment professionals are not rewarded for the use of any particular product over another.

Moreover, our clients may benefit from our collaborative team-based approach in which we integrate investing, banking and wealth planning as part of the wealth management process. Clients don’t have one individual working toward their goals; they have an entire team of professionals. We have a stability of operation that supports our belief that we’ll be here tomorrow, the next day and so on, still doing what’s in our clients’ best interest.

 

Davis: We believe the best team wins, and we believe we’ve become a top destination for some of the best financial professionals in the industry. High-quality professionals are drawn to us, and are staying with us, because of our service-oriented culture and how we navigated the recession.

 

Our goal is to provide clients with a home run: trustworthy, honest teams that have their best interest at heart. After all, banking is a business of people and for people, and we vow to never lose sight of that.

 

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Financial Planning