Jun 02, 2021
This month, our client service team worked its way through “The Ensemble Practice” by Philip Palaveev. I was first introduced to this book through an executive leadership program and in true Narwhal fashion – the general premise (more on that in a moment) was not only something that the firm agreed with but was actually something the firm had already stumbled into.
In the book, Palaveev, makes the case that the old “hunting” model of wealth management—focused on individuals pursuing books of business on their own and managing assets and servicing clients in isolation, by themselves—is antiquated and inefficient. In reality, ensemble practices (meaning firms with multiple layers of professionals with various specialties) deliver more for clients and maximize efficiency for the firm. If you’re a client of Narwhal’s and pleased with our organizational structure this may seem like a no-brainer and to some who read the book, it probably wasn’t surprising. But Narwhal was not necessarily structured in its current form with that much intentionality. Our dedicated teams (investments, client service, accounting, and operations) were largely created in an attempt to increase client touchpoints and create efficiency. We weren’t goal-seeking towards favorable data.
That being said, the data relayed by Palaveev, was and is quite validating to our organizational structure and priorities. Though only 25% of firms (as of 2011) identify as an ensemble practice in which a team of professionals shares resources, those firms have a number of unique and favorable characteristics. Some of those are metrics unique to the industry and may not inherently build value for clients. Case in point: I’m not sure that our average client cares too much about how an outside appraiser would “value” our firm on a multiple of profitability or revenue (though that multiple would be higher given our structure). But as Palaveev points out, ensemble practices deliver confidence to clients in the area of continuity. It is exceedingly rare that clients meet one-on-one with Narwhal employees. In most (and nearly all) instances, clients are meeting with multiple representatives from multiple departments. The goal of this is to enhance the client experience, provide a broader interpretation of client needs and multiple touchpoints of expertise. As a byproduct of this, the author suggests we are addressing one of the clients’ largest fears: What happens if my advisor gets hit by a bus? As Palaveev summarizes:
Many of the solo advisors I have worked with have told me that clients ask, “Frank, what happens with our accounts and our plan if you get hit by a bus?” This may seem like a very unlikely (statistically speaking) possibility, but this is actually a deep concern of many clients. The concern is not just about the bus (bus drivers are among the most careful drivers you will encounter) but rather about the general possibility that the advisor may not be able to assist the client or may not be available. This includes vacations, illness, family emergencies, and everything else that may make one person unavailable. Relying on one person is such an unreliable strategy! The ability of ensembles to create that sense of continuity and reliability is a great advantage and much understood and appreciated by clients.
Candidly, that sentiment is what has driven our growth. Sure, we like the perks that come with our corporate setup and we would generally be in agreement with much of the research presented in the book as it relates to the viability of the business model itself. But we care much more about the client experience and the faith and confidence we can bestow in each and every member of the team here. Having been with the firm for over ten years, I can say confidently that the hiring standards have increased dramatically over the past decade (I wouldn’t get hired now!) and with that, we’ve enhanced our commitment to employee development and heightened performance expectations for all departments.
That’s not to say that we have it all figured out. In fact, as we’ve become increasingly client-facing but also specialized, we’ve created some knowledge voids. An ongoing initiative within the firm is to promote some cross-training between divisions. We don’t need our client service personnel making trades within client accounts (and we don’t allow them to), but we do want them to have a clear understanding of what we’re seeing within the market and how we’re positioning portfolios. We don’t need investment analysts handling money movement or paperwork for new clients, but we do want them to understand how those processes work and what initiatives are underway. That, I believe, is the ongoing struggle of growing an ensemble practice but I think it’s a worthwhile fight.
Vice President, Portfolio Manager
Andrew’s career with Narwhal began as an intern during the summers of 2008 and 2009. He was hired in a full-time capacity in 2011. Andrew enjoys a multifaceted role and splits his time between portfolio management, client engagement, and operations. Andrew serves on the Advisory Board for the Mercer University Student Managed Investment Fund and completed the Charles Schwab Executive Leadership Program as a member of the 2019 class. Andrew and his wife Amanda live nearby in Marietta with their two kids.
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