June 20, 2011 / 8:45 PM / in 6 years

Wealth Manager-Where really big money goes to find company

7 Min Read

NEW YORK, June 20 (Reuters) - You've worked the golf clubs and joined all the right charitable organizations. Maybe now is the time for you to take a seat inside the manor house.

Family Office Exchange and the Institute for Private Investors, the largest peer-to-peer membership associations for families and individuals, offer connections to people with billions of dollars and many of them are actively looking for new ideas for how to manage their considerable wealth.

Membership would seem to be a no-brainer -- but a financial adviser considering joining should first understand the cultures of these ultra-high-net-worth enclaves.

Chicago-based Family Office Exchange is, as its name implies, geared towards wealthy families who either belong to a multifamily wealth management office or have a single-family office to handle their business, tax, accounting, legal and asset management needs.

Wealthy families and individuals who are seen as more self-directed tend to belong to New York-based Institute for Private Investors, which was bought earlier this year by Campden Media, a London company which presents conferences and networking forums for ultra-high-net worth families around the world.

Both organizations are for-profit companies founded over 20 years ago that provide members with research, education and networking opportunities. Family Office has about 300 member families with combined investable assets estimated at around $120 billion, and Institute for Private Investor's has 1,000-plus individual members have an estimated $50 billion in combined investable assets.

IPI members must have at least $30 million in investable assets. While FOX doesn't require a minimum, the organization notes that it takes about $100 million to run a family office.

Both have about 150 professional service firms as members, including financial advisers and broker-dealers. FOX charges wealth managers $15,000 to join and IPI, which declined to be interviewed for this story, charges $5,000, according to industry sources.

But just because you have paid the membership dues doesn't mean you can walk in and start pitching your firms' services.

A hard-sell in these circles is a major no-no.

"This is not the right organization for a wealth advisory firm looking for purely business introductions," said Sara Hamilton, FOX' founder and chief executive.

Members of its private investor counterpart, IPI, say the same about their group.

"They are very sensitive about pitching and selling to members," said Patricia Soldano, president, California for GenSpring Family Offices. "You shouldn't join and expect to be fed prospects. That's not the way it works."

So what is the value of becoming a member of these high-end groups? Positioning, education and competitive intelligence, say wealth management executives.

"There is simply no better, more targeted way to be visible to families of great wealth," said industry consultant Jamie McLaughlin, former chief executive of Geller Family Office Services.

"This is a very narrow universe, one that you can't reach by just putting an ad in a newspaper or magazine."

In addition to being able to post white papers online and let members know what your firm can do, joining FOX or IPI gets you up to speed on industry trends and data, and allows you to find out what your target market is thinking about.

"We belong to both organizations and I think the greatest benefits are the resources you can get and the networking," Soldano said. "There's a wealth of useful information and an opportunity to meet like-minded people on-line and at conferences. You have to be there to learn about the industry and what it's all about. If you don't you will market to it all wrong and be unsuccessful."

Charles Lowenhaupt, chairman and CEO of St. Louis-based Lowenhaupt Global Advisors, who also belongs to both organizations and is a founding board member of IPI, agreed.

"The hardest part of being a good wealth adviser is listening and helping clients work through their issues," according to Lowenhaupt, co-author of "Freedom From Wealth," which will be published in September by McGraw-Hill. "Both FOX and IPI give advisers a unique opportunity to hear families of wealth talking about their issues. And the more you listen, the more you can help."

Being in the mix also allows wealth managers to easily see what the competition is up to.

"You can see what everyone else is doing," said Steve Aucamp, executive director, ultra-high net worth group, for Rockville, Md.-based Convergent Wealth Advisors, which belongs to both organizations. "There are also recruiting opportunities because you can observe talent and identify qualified people who may be right for the firm."

While the organizations downplay it, new assets and referrals are the lifeblood of wealth management, a fact of life that neither FOX nor IPI ignores.

In fact, the best referral sources for advisers can come from other service providers who don't specialize in a particular area, but can recommend a wealth manager who does, Hamilton pointed out.

"It's valuable currency to be able to refer another good advisor," she said.

The two organizations sell premium levels of membership with increased access to wealth owners for firms like Wells Fargo and Rockefeller Financial who can afford it. The special status also requires that the firms "demonstrate expertise...as leaders in their field," as FOX puts it.

Price of admission to be a FOX's "Strategic Advisor" is a cool $75,000 while admission to IPI's "Leaders Council" is a reported $45,000. A recent listing of adviser members for an IPI event included units of Fidelity, Charles Schwab (SCHW.N), Wells Fargo (WFC.N), BlackRock (BLK.N), Citigroup (C.N) and Bank of America (BAC.N).

Having more access to individual or family members at more conferences and events does make a difference, Soldano said.

"The commitment and investment on our part is greater," she explained. "We get to participate in organization events and make sure they are valuable."

But general members also expressed satisfaction that they were getting their money's worth.

"We're able to access industry information that is otherwise unattainable," Aucamp said. Members can also contribute research to online forums and host informal roundtables at events.

It might not be the one-on-one meeting opportunity to try out your well-honed pitch and show off your stellar performance charts. As McLaughlin points out: "Hitting on people is bad form."

But for those who are patient and subtle, there is a payoff.

"There is access to get in front of prospective clients," says Aucamp. Very rich prospective clients.

Reporting by Charles Paikert, editing by Richard Satran

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