Implementing Next Gen Leadership Transitions in the HNW Space

Brothers Max (33) and Lucas (31) Winthrop Look Back on Successful Generational Leadership Transition at Winthrop Wealth

James Miller, Contributing Editor,
Wealth Solutions Report

In an increasingly digital world dominated by social media and celebrity worship, the high net worth (HNW) wealth management space has largely remained a bastion of stability where gray hairs suggest reliability to clients.

Unlike, say, the technology and media sectors, being younger isn’t always an advantage in the HNW segment of wealth management.

And that’s what makes the successful next gen leadership transition at Winthrop Wealth, a Boston-based wealth management firm with over $1.5 billion in client assets, all the more impressive.

Founded in 1984 by brothers Earl and Mark Winthrop, each a practicing CPA, Winthrop Wealth was launched as an independent firm at a time when the industry was heavily dominated by wirehouses, banks and insurance firms focusing on transactional brokerage business with retail investors.

Relatively unique at that time, the original Winthrop brothers saw an opportunity to stand out by embracing the advisory model, with an emphasis on holistic planning and careful investment due diligence versus pushing sales of financial product.

Next Gen Leadership Transition

Max Winthrop, CEO, Winthrop Wealth

It was a value proposition that resonated with high net worth individuals, families and business owners over the decades. The firm organically grew its assets to roughly $1 billion by 2017, when Earl and Mark Winthrop felt the time had come to transition the firm to the next generation of leadership.

They were fortunate to find their successors close to home, so to speak, with Max and Lucas Winthrop, Earl’s sons. Lucas Winthrop joined the business in 2013 after graduating from the Peter T Paul School of Business at the University of New Hampshire, interning every summer in Earl’s office.

Subsequently, his brother Max Winthrop came aboard the firm after studying abroad at the London School of Economics, and doing a stint with Sun Life of Canada in a private investment capacity.

The next generation of Winthrop brothers saw an enormous opportunity to create the HNW wealth management firm of the future, by further integrating different parts of the firm, investing heavily in the latest technology tools and solutions, while setting up the firm’s own independent RIA, Winthrop Advisory Group.

Lucas Winthrop, COO, Winthrop Wealth

Since then, Max Winthrop, the firm’s CEO, and Lucas Winthrop, Chief Operating Officer, have significantly grown the firm, expanding client assets to over $1.5 billion, and growing the firm’s team of employees from 8 to 15.

Equally important, this growth was generated by retaining existing clients of the prior generation while adding new client relationships over the past several years – Proving that you don’t need gray hairs to succeed in HNW wealth management if you have the right foundations and strategy.

WSR connected recently with Max Winthrop, CEO of Winthrop Wealth, to get his thoughts on how HNW-focused independent firms can successfully execute on a next gen transition of leadership.

WSR: What were the biggest opportunities and challenges that you faced with the generational transition of leadership at Winthrop Wealth – And how did you effectively navigate those challenges while maximizing opportunity capture?

Winthrop Family (left to right):
Earl, Lucas, Max, and Mark

Winthrop: The clearest opportunity for us was the potential to create true scale. Scale would enable us to enrich our service offerings and elevate the client experience. This opportunity stared us right in the face as both Earl and Mark had built successful practices independent of one another, each with a robust client and asset base.

A combination of the two practices to create a firm with true scale was the biggest win as it created continuity for our clients, allowing us to heavily reinvest in both broadening and deepening our client relationships.

The biggest challenge was overcoming the family dynamic of an intertwined business and personal relationship. This is an ongoing challenge for any family business as the dynamic is always shifting, but we have done a good job separating out personal emotions and making data driven decisions.

Change can be scary and out of the gate, the idea of making major changes to the business involved a lot of difficult discussions. It was critical to constantly build the trust of our partners and firm’s co-founders, Earl and Mark.

We did this by breaking down the big picture vision into smaller more manageable pieces where we could demonstrate execution and success. Each win created more buy-in and today we have built a level of confidence that allows us to manage the business fluidly.

The partners know that we have their best interests in mind and the growth and team productivity backs this up.

WSR: What was the typical “sweet spot” client for Winthrop Wealth under the first generation of family leadership, and has that ideal client profile changed under the new generation of leadership?

Winthrop: Winthrop has always operated under a philosophy of, putting the client first, do what’s right and the rest will follow. Since the beginning, Winthrop has always focused on working with clients based on fit, not potential profits.

Alignment and shared values are the bedrock of our relationship with clients built on honesty, transparency, and trust.

Since the firm’s inception, our core clients embrace these values and can be best defined as the entrepreneur. However, Winthrop’s definition of the entrepreneur is not the standard.

Winthrop defines the entrepreneur as a change maker – Someone who is motivated and committed to achieve greatness in whatever their pursuit.

Our definition of the entrepreneur leads to a loyal client base of like-minded individuals, many of whom are, in fact, founders of their own businesses, athletes who’ve reached hall of fame status in their respective sport, corporate executives, and others who have excelled in their respective profession.

We continue to stay true to our core values of working with clients based on fit. Since the transition, our platform has allowed us to open our doors to working with younger clients who don’t necessarily have the wealth today and thus get turned away from most independent Wealth Managers as they do not reach their firm minimums.

Don’t have the wealth yet? We’ll help you build it until it grows!

We’ve made a pivot to focus on this next gen segment while making an investment in their success by eliminating firm minimums to provide comprehensive guidance and planning early on in their venture or respective careers.

As many of our younger clients in this demographic are in fact business owners, we’ve played a critical role in building their foundation and as a result, we hope to play a role in managing their future wealth.

WSR: What new capabilities and service offerings for clients did you add or expand upon following the leadership transition?

Winthrop: Since joining the firm and assuming leadership positions, we have built a scalable infrastructure that empowers our firm to provide a world class experience and go deep in all aspects of financial planning and wealth management.

Prior to the transition, many of these functions were outsourced to strategic partners with little structure or process. We were dependent on these partners, sitting outside of our firm, to provide the level of service and depth of expertise we wanted for our clients.

Since the transition, we made a commitment to bring many of these functions in-house. We’ve formalized the following internal departments and staffed each department with credentialed and experienced subject matter experts in, Financial Planning and Advanced Planning (Estate and Insurance), Investment and portfolio management, Service and Operations, Compliance, Technology – all of which are powered by our proprietary integrated technology stack – the eMpower Advisor Platform.

In building out our service offerings and formalizing departments, our advisors gained back tremendous capacity allowing them to deepen client relationships and add tremendous value. The validation of our new business model has allowed us to selectively open up our infrastructure to partnership opportunities for other advisors and firms.

WSR: How have you been able to use your relative youth as an advantage in building trust with existing and new clients – And what words of advice would you offer to peers in your age group who are being tapped to spearhead HNW wealth management businesses as part of a generational leadership transition?

Winthrop: One word: Teamwork. It’s all about the team.

Don’t do it alone. Don’t pretend you know what you don’t know.

Be authentic and intentional in working with clients. Be patient in gaining clients trust.

The best advice we can give young people in our industry is to surround yourself with a team that can mentor you and leverage their knowledge and experience to provide value to clients. Build your team and be the quarterback, showcase your team to your clients.

Not only will clients see the depth of your bench, but industry studies have shown that clients feel more comfortable working with someone they know has a team behind them, regardless of age. Building our team and leveraging them in client meeting has hands down been one of the biggest wins for us in establishing ethos with our clients.

Also, by surrounding ourselves with these subject matter experts and collaborating with them on cases has exponentially compounded our personal growth and knowledge.

Additionally, with the aging demographic of advisors, many are close in age or older than the clients that they work with. This is a concern for many clients as they approach retirement and worry about advisor succession, especially for HNW and UHNW individuals and families.

WSR: What does your growth vision look like over the next three years, and how do you intend to achieve your strategic goals?

Get ready for the journey ahead….We’re in this for the long haul!

Winthrop: The next three to five years will be crucial to our long-term success. The industry continues to transform at a rapid pace and many of our peers will likely be consolidated. Our desire is to be around for the long-haul, we want to be working with our clients 30 years from now.

Our long-term mindset requires that we make the right decisions today so that we can continue to be viable going concern and a destination of choice for clients looking for comprehensive personal wealth management.

The next three to five years will require us to make significant investments into our generational team to have a clear client transition path as our older advisors eventually slow down, evolve our internal infrastructure to always be on the cutting edge to ensure we operate as efficiently as possible, and deepen the human connection with our clients.

We aspire to grow our client base, delivering value to more families. We will do this strategically and vow to never comprise on quality – the value has to be there!

Five years from now we could see our firm being twice the size it is now. Success will be measured by our clients’ satisfaction, retention, and the culture of our team.

James Miller, Contributing Editor & Research Analyst, can be reached at ContributingEd@wealthsolutionsreport.com

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