High Technology Altering Client-Recruiting Tactics

Technology is changing some of the tenets of client recruitment in the wealth management industry, even when the targets are high-net-worth prospects with complex financial lives.

Summit Financial Resources, a Parsippany, N.J., wealth management firm, skips its initial face-to-face meeting with clients and goes straight to teleconferencing. It’s not for lack of manpower; Summit has about 200 professionals to service its clients, a small army when you consider that most financial planning outfits run with a staff of three or four, including the planners.

But Summit prefers to organize teleconferences using the software Go To Meeting in the initial client-screening process.

The firm and potential clients assess each other without so much as a handshake. Not one adviser, attorney or other highly trained professional from Summit sits down across a desk to gauge the client’s potential interest and need, and to figure out whether they meet the minimum net worth required to contract with Summit.

Instead, a handful of professionals use PowerPoint slides to outline Summit’s services to clients.

It seems to work.

At its main base in Parsippany, plus offices in New York City, Westchester County, N.Y., and Fairfield County, Conn., Summit manages about $3 billion of client assets, according to Joe Spada, its senior owner and managing director.

Summit is not alone as it embraces teleconferencing. Modera Wealth Management, with offices in Boston and New Jersey, uses teleconferencing to connect its legal and compliance experts in Massachusetts with its advisers and other high-level professionals in New Jersey.

Even when telconferencing, a firm’s employees might not be in the office.

Larger financial planning organizations also engage in telecommuting, which allows employees to work from home, instead of being required to come to the office every day. About 21.5% of all financial planning firms offer telecommuting as a benefit to employees, according to the 2010-11 Financial Planning Salary Survey from the Financial Planning Association.

Telecommuting is more common among larger outfits. About 19.9% of firms with one to five employees offer telecommuting, compared with 21.2% of those with six to 30 employees and 26.7% of firms with 31 or more employees, according to the FPA.

The march of technology is likely to make these two practice management techniques more prevalent in the financial advisory profession; a 21.5% adoption rate for telecommuting is not huge, so the industry has room to run.

It also makes sense that the use of these technologies will grow because many wealthy clients are senior-level executives who conduct business that way every day, Spada said in a telephone interview.

If they can manage to run successful practices and businesses using Go To Meeting – or Skype or some other virtual meeting software – then getting on a computer monitor with an adviser is not a big problem.

Advisers who work in Summit’s regional offices also benefit from teleconferencing, because they can easily tap into the expertise of accountants, attorneys and tax professionals with detailed questions from their clients.

During one of 2010’s heavy snowstorms, Summit convened a meeting of its 15-member investment committee using Web-based technology.

Telecommuting isn’t for every financial advisory practice, to be sure. Larger, regional firms that need to make the most of their advisers’ workdays are probably the best users for virtual meeting software, Spada pointed out.

Also, if an organization recruits a small number of clients a year, say 20, and the bulk of those patrons are local, then teleconferencing is probably not as useful.