(post-gazette)-- Carrie Coghill realized just how much her job as a financial adviser had changed as she sat at a bank helping a client open her first checking account in her own name.
The client was a married homemaker. The separate bank account was Ms. Coghill’s idea. The woman had been unhappy with her husband’s complaints when she bought lipstick or a pair of shoes. None of the purchases was extravagant, but the husband felt the money should have been saved.
“She got beat down on every purchase,” said Ms. Coghill, president and CEO of Coghill Investment Strategies, Downtown.
“To his credit, the husband was concerned about the security of the family. But we had to have a discussion with him about happiness and daily fulfillment.”
Advisers who work with individuals and families to create long-term financial plans say their role has evolved to a point where every year they are having more discussions and performing more services that fall outside the traditional responsibilities of monitoring their client’s investments.
The detached adviser crunching the numbers is becoming obsolete in an age where more people with the means to afford a professional money manager expect that person to wear multiple hats.
This new breed of adviser is part financial planner, part therapist and part life coach — especially when life throws the client curveballs like a marital split or a health crisis.
Financial advisers tend to be paid handsomely for their services. For the most part, they earn revenue by taking a percentage of the total assets under management. The percentage can vary, with some charging as much as 2 percent.
According to a 2017 AdvisoryHQ study, the average adviser charges 1.02 percent of assets under management. For a $1 million account, that would amount to about $10,200 per year.
For many clients, that seems like enough to demand more than stock tips.
“People come to us with personal issues and problems when they are not comfortable going to a family member or a friend,” said Bob Hapanowicz, president of Hapanowicz & Associates, Downtown.
How personal?
“The first thing that comes to mind is divorce. Sometimes we are the very first people they come to when they are considering getting a divorce and don’t know what to do.”
Resolving conflicts
Clients may use their adviser as a sounding board to talk about the possibility of changing careers, a death in the family, trouble with their children. Advisers are increasingly accustomed to being used to help resolve conflicts between married couples — often those related to money.
“We as advisers have to be almost therapists when dealing with couples,” Ms. Coghill said.
Adam Yofan, an adviser at Buckingham Strategic Wealth, Downtown, has had conversations with his clients about which charities they want to support and why those charities are important. He has listened to people talk about the guilt of not supporting an adult child. He has mediated between spouses who can’t decide where to retire.
“When I got into this business 20 years ago around the time of the dot-com buzz, it was all about stock picking and who could make their clients the most money,” Mr. Yofan said. Back then, he said, the relationship was almost purely transactional. “There was no time for personal issues.”
That may still be true for some advisers and clients at the top of the economic food chain.
Clients at the Greycourt & Co. wealth management firm on the South Side have an average of $200 million in assets under management, and according to the company’s chairman Gregory Curtis, they don’t look to him or his staff for much more than investment guidance.
“If they need a life coach, they go out and hire a life coach, and so on,” Mr. Curtis said. “They tend to look for highly specialized kinds of people. And we are highly specialized in the investment area.
“But when you get down into smaller net worth families, even up to about $2 million in assets, they are probably looking to their financial adviser for broader help,” he said.
Financial therapy
Kansas State University began offering the nation's first graduate-level certificate in financial therapy in 2015 in response to the industry moving away from a focus on commission sales to an advice-driven, fee-based revenue model.
Students in the master’s degree program in financial planning also receive a certificate for course work completed in financial therapy training, which touches on marriage and family therapy and some aspects of psychology as it relates to money management.
Between 80 and 100 graduates have been awarded the certification so far.
“While therapy is best left to people certified and trained in therapy, we do think there are techniques planners can use to work with clients,” said Martin Seay, program director and associate professor of the personal financial planning program at Kansas State.
Advisers at Schneider Downs Wealth Management Advisors, Downtown, noticed a few years ago that several clients or people close to their clients were coping with issues related to their health.
The firm’s managers assigned a group of advisers to create a pamphlet providing the contact information for resources, such as home health care and support services, which they distributed to their clients.
“We’ve had several clients ask us to talk to their children,” said Nancy Skeans, CEO of Schneider Downs. “I have met on several occasions with a client’s child and their future spouses to talk about budgeting and buying a home. The client is very appreciative because it’s hard to have those conversations.”
The child often appreciates it, too. “The child will tell me things they won’t tell their parent,” Ms. Skeans said.
As the financial advice industry moves away from the traditional brokerage relationship toward more holistic planning, advisers at Waldron Private Wealth in South Fayette have assumed the role of coaches to hold clients accountable for accomplishing personal and financial goals.
“These goals are very big vision-oriented ones like leaving a lasting legacy in their communities or raising their children to be well-rounded adults who are thriving on their own,” said Matt Helfrich, president of Waldron Private Wealth.
“We also establish and hold family meetings with multiple generations in the family so that the wealth and the goals behind the wealth are transparent and communicated.”
Matt Costigan, a principal and senior financial adviser at HBKS in Warren, said with the advent of robo-advising, automation of investing is expanding. But a robot will never be able to provide the human touch that clients may want.
“Sometimes we are just an ear for whatever may be going on in a client’s life and you spend more time talking about that than what their return was for the last quarter,” Mr. Costigan said. “So often you hear this is a relationship business. What that really means is people do business with people they like and trust.”
As for the couple that Ms. Coghill helped work through the disagreement on spending for shoes and personal items, the separate bank account seemed to help.
“The money she spent wasn’t affecting their ability to achieve long-term goals and it was important for her to have money to spend,” Ms. Coghill said.
“We decided on an amount both parties were comfortable with and we went with her to set up a bank account just for her. So every month, that amount was transferred to her account and she could spend it with no questions asked.”
