With Ray Sclafani of ClientWise

By Lisa Shidler

Advisers know how to discuss retirement issues with their clients, but hiring and firing employees, and running the back office, isn’t always their forte.

For 12 years, Ray Sclafani, 38, has been coaching advisers about how to manage their practice.

Mr. Sclafani, president and founder of ClientWise LLC of Tarrytown, N.Y., began his career at Alliance Capital Management LP in New York, where he was in management and did some training. For the past year, he has run his own business, showing advisers how to improve their practices.

Advisers go to Mr. Sclafani for help in improving their sales performance and building deeper relationships with clients and business partners.

Sometimes the answers to problems and obstacles that face advisers are quite simple, he said.

For instance, advisers often spend too much time on smaller accounts and can’t communicate their value to their clients.

Ray’s helping me grow my business, and every time we talk, he focuses me on what I want to do,” said Christopher P. Jordan, principal and chief executive of LEXCO Wealth Management Inc. in Tarrytown.

Mr. Jordan, a practicing adviser, said that Mr. Sclafani helped him figure out how to divide his time between running his business and meeting with clients.

Indeed, speaking with a neutral third party who is familiar with managing an advisory practice can be invaluable to advisers.

“When I talk with him, we often unlock things that I couldn’t figure out on my own,” said Jim Winkelmann, principal of Huntleigh Capital Management Inc., a registered investment adviser in St. Louis that is a wholly owned subsidiary of Longrow Holdings Inc.

“It’s very rare you’ll find a single person who stumbles on a single fantastic idea,” Mr. Winkelmann said. “That’s what Ray is good at.”

Q. What are common obstacles that advisers face?

A. They have problems knowing how to hire, reward and train staff. They want team responsibility, but they need a vision.

Many of them don’t have a vision for their practice and how that integrates with their personal life. People don’t realize how much time we spend professionally, and it impacts our lives.

We’re often coaching advisers who want to improve client acquisition, but then we tell them they need to stop doing something else to focus on client acquisition.

It may mean a couple of extra nights doing a client workshop, and [the adviser] needs to think about how that will [affect] their family.

Q. What is the biggest obstacle that advisers face?

A. I think it is commoditization. [Advisers] have to articulate their relevant value. They have to be able to articulate why they deserve a fee. They have to be able to run a profitable business.

No longer is it smile and dial, or bet a bunch on a hunch. Those days are over.

Now it’s about having a strategic plan and running a business and executing that plan. They’re just not a bunch of stockbrokers. These are wealth advisers, and their clients have entrusted their lives to these people.

Q. Are there advisers who don’t understand how to run a business?

A. Yes, they’re so focused on the day-to-day activities in their businesses. They’re doing the work as an adviser, yet sometimes they need help stepping back and observing how the business is being run.

Q. What are the average assets under management of the advisers you coach?

A. I’d say probably an adviser with $50 million to $75 million in assets under management.

Q. What are some firms where you have coached advisers?

A. We’re working with advisers at Merrill Lynch [& Co. Inc.], Morgan Stanley, Raymond James [Financial Inc.], AIG Advisor Group [Inc.], Wachovia [Corp.], Bank of America [Corp.] and UBS [Financial Services Inc.].

Q. Why did you switch to coaching and decide to open your own business?

A. I recognized the game has changed. Advisers are providing value to clients beyond just the investment management piece. There’s so much emphasis on investment management and not enough about business management. I was having fun coaching people [at Alliance] and decided to do it full time. I saw a huge need in the marketplace.

Q. What is a major mistake that advisers make?

A. Advisers think they can be the general practitioner and be all things for everyone. It’s a huge mistake they make. Then it becomes very difficult articulating their value. Can you serve physicians, engineers, small-business owners, corporate executives and widows? Can you serve all of those types of people? No. You need to be an expert.

Q. Should advisers turn down new business?

A. Yes, they absolutely should be able to say no. It’s really about acquiring the right kind of clients.

Q. How have you helped advisers increase revenue?

A. It’s really about looking at [an] existing book of business and determining [which] clients are most profitable, and moving more toward those types of clients.

The advisers we work with are very smart. They know how to get what they want—they just need help.

Q. What is an example of a mistake an adviser made in operating the business?

A. There was an adviser who had signed a lease and had no idea that his rent continued to ratchet up every year at a fixed cost. He had signed the lease, and the bills kept going up, and he never knew how much he was paying.

Q. What are the most common questions that advisers ask you?

A. “How do I articulate my relevant models to my clients?” “How do I build a brand in the marketplace?” “How do I acquire clients?”

Q. How do you think the role of the adviser is changing?

A. I think advisers are going to become more like coaches to their clients. I know an adviser who works with small-business owners. He coaches his clients about ways to run a business. He offers them advice about how to manage cash flow, and he understands how to negotiate better leases for equipment.

Q. What is the biggest danger an adviser faces?

A. I think if an adviser’s value is solely focused around asset management, they’ll have a tough time of it. We’ve been saying for decades that the baby boomers are coming, and you know what? They’ve arrived. They’ve arrived in large numbers and have higher demands. They’re asking about fees. They’re better educated, and they want their services customized.

Q. You have been in business just one year. Do you have plans to expand?

A. Yes, we’re going to expand into Canada and Australia. That’s part of our business strategy.

My sense is, we’ll have a firm foot on coaching this year, and our hope is to expand next year globally. We’re identifying potential clients.

Ray Sclafani is President of ClientWise LLC, an organization founded to support the financial advisory practice of the future. Delivering unique practice management strategies focused on client acquisition and retention, ClientWise provides coaching and training for leading financial advisors. For more information, e-mail ray@clientwise.com or call 1-800-732-0876.

Originally published in Investment News, February 2007.
Copyright Ray Sclafani 2006.