Wealth management executives like Morgan Stanley's Greg Fleming, featured in On Wall Street's annual ranking of wirehouses and regional broker-dealers, have the big picture in mind when it comes to working with clients.
That explains why Fleming is backing lending products these days. He tells Associate Editor Andrew Welsch in this month's cover story that loans are a huge opportunity.
Morgan, according to the numbers, has been ramping up securities-based lending and residential real estate loans to stay profitable and competitive and, the firm says, increasingly meet the needs of clients. They and other firms hopefully will be mindful to avoid a repeat of the dire problems that arose for many borrowers (including HNW clients) going into the 2008 financial crisis.
True, advisors don't normally pitch loans, and they aren't compensated for lending services in quite the same way that they earn commissions and fees on other products. Aside from boosting the bottom line, Fleming points out that the direct benefits for advisors include the development of stronger client relationships and sticky money.
The rationale is convenience. A client will likely become happier getting their advisory services and other financial needs taken care of by the same firm. In some cases, the client may even get favorable terms and pricing on certain products, and be inclined to hold their deposits in the firm's bank.
Brian Hull, head of the Client Advisory Group at UBS, says these services are a natural extension of the client relationship. Wells Fargo's Mary Mack offers that the firm lands opportunities to better meet client needs when different Wells units work together. Tash Elwyn of Raymond James & Associates also mentions that his firm offers lending and mortgage capabilities, but says that it "is paramount that those introductions or referrals are made on the advisor's choice."
"Look, many advisors get it, that this is just part of what's now expected of them," a branch manager tells me, on condition that he not be identified because he did not have permission from his firm to be interviewed.
He says he's fielded some complaints from advisors, but that most have embraced the approach. "It's what goes along with working at a wirehouse or a regional, and fits with the whole holistic approach to working with clients," he adds. "I think most advisors understand that."
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