Wilmington Trust’s Capital Considerations with Tony Roth
Wealth Management Leader Doris Meister Surveys the Industry Landscape
Tony Roth, Chief Investment Officer, Wilmington Trust Investment Advisors, Inc.
Doris Meister, Executive Vice President, Head of Wealth Management, Wilmington Trust
DORIS MEISTER: I think it’s a particularly important time for clients to have those advisors in their life, an advisor who can help them think through their way of navigating all this change and their way of staying on top of the changes as they evolve. I think it’s a very, very important time to have access to advisors who can help you think through all the ramifications of legislation and what it means for you personally
TONY ROTH: That was Doris Meister, executive vice president and head of wealth management here at Wilmington Trust and M&T Bank, sharing her thoughts on how the delivery of financial services and advice is changing and what it may look like in the future.
TONY ROTH: Welcome to Capital Considerations, the market and economic podcast that’s fully invested in your success. I'm your host, Tony Roth, chief investment officer of Wilmington Trust. Today, we lift the lens to take an overarching look at how the pandemic has impacted both our firm and the wealth management industry. To lend insight into those issues, we are very fortunate to have with us today Doris Meister, the head of wealth management at Wilmington Trust.
Doris has spent the majority of her career in wealth management and private banking, serving in leadership roles at Bank of New York Mellon, Alliance Bernstein, and Merrill Lynch. She has led Wealth Management here at Wilmington Trust and M&T Bank since 2016 and in 2019 she received a prestigious nod from Crain’s New York Business when she was named one of the most notable women in banking and finance. Doris, thank you so much for being here today.
DORIS MEISTER: Thank you, Tony. It’s a real pleasure and a very interesting subject we’re about to discuss.
TONY ROTH: Yeah. It is, indeed. I think that, Doris, you’ve seen throughout the years the business evolve in a lot of different ways. Sometimes those evolutions have been gradual. Sometimes, like for example in the great financial crisis, less gradual. I would say that, at least in my experience, the shock, if you will, to the industry from the pandemic, along with a lot of other changes that were already happening that were somewhat accelerated, like the rise of ETFs, fee compression, the shift towards technology and consumers of financial services becoming even more savvy in how they use technology to access wealth management, there’s been so many changes recently.
I think the starting point is probably just to ask you how do you think about the way the industry’s changed in the last year or so since the pandemic? What’s most notable in your mind?
DORIS MEISTER: Well, I think for all of us it came on us suddenly. It was a global issue and it had life-threatening kind of implications and particularly at the beginning it was not very clear what the threat really was except that it was significant in how it was going to affect all of us. And then, we immediately kind of hit the stop button in term of the way we were living our lives. And we had all been traveling a lot and running around. The economy was strong, and people were probably overactive in some ways. I mean all of us were—live pretty hectic lives and we were almost operating at a fever pitch sort of level.
So then, beginning in March last year here in the U.S. and then it gradually escalated globally, we all hit this pause button also started to do a couple things for people. Faced with this threat, you tend to think through your priorities, think about your life, and be much more reflective in general. Because of the remote aspect of the pandemic, the lockdown or shutdown, whatever you want to call it, people suddenly had more time and the world sort of slowed down a little bit. Well, actually quite a bit.
So, effectively, what happened is people were faced with an existential threat and then had the time to really go deep and think about what does this mean for me and my family in every respect? So, in working with our clients over the course of the pandemic, particularly at the beginning, we were dealing with a lot of emotions. And as time passed, people became more and more interested in rethinking their priorities, taking stock of their life, and thinking very hard about what path they might want to be on after this period of time passes. Because the pandemic has lasted over a year or with the shutdown, some people have made very, very big life decisions and are reformulating their plans, both in terms of how they want to live their lives and also obviously financially what they plan to do.
So, I would say, you know, it’s not too different, Tony, in some ways than the post-9/11 period. I was at Merrill Lynch at the time when 9/11 happened and it was a complete shock to the system, particularly for people in the New York area. But really, all Americans and people around the world were affected by that and many people made big decisions about how much time they were allocating to work versus family, where they were living, how much they needed to make to be happy, and so on and so forth.
So, it’s a big point of reflection and reevaluation and many people are actually rethinking their path they’re on. I do think that while that all happened and that was a change, an abrupt change from what was going on previous to the virus breaking out and the remote shutdown, some things are still the same, which is the importance of relationships became sharply into focus and people also became very clear about their priorities. And so, as trusted advisors to clients, we worked really hard proactively to be there for them as they were going through this emotional shock and as they wanted to start proactively planning some possible paths or options that maybe they weren’t contemplating before.
TONY ROTH: Doris, it’s interesting because I was thinking about the changes that we’ve gone through as an industry, focusing on how do we communicate with our clients, how do we serve our clients when we can’t actually be with our clients? And I love the analogy to 9/11 because it really was a shock to the system and we’ll all look back at this and say this is one of those things in our lives that were transformative.
And so, clients are having to rethink their lives. So, coming at it from that angle I think is really interesting because, you know, we deal with complexity and we really pride ourselves on providing advice to our clients and we’re not just an investment manager. We’re really a full-service advice shop, if you will. Talk to us about what should families be looking for in this context or this kind of change in their lives from their wealth advisor? What should clients really demand and expect from their wealth advisor and the kind of advice we can provide? Maybe if you could talk about the idea of trust too, because if that’s not part of the relationship, then our ability to provide that advice is also not going to be very effective.
DORIS MEISTER: I think that’s right, Tony, and I think you mentioned that we’re comprehensive wealth advisors. And I think for those of us in the wealth management industry who operate with that model of being comprehensive, what the client really wants is someone who has access to deep veins of expertise in a number of areas, planning, banking, investments, and the fiduciary area or trust area, because what clients need is someone who can look at their total situation and help them basically think through what are the steps they need to take to achieve their objectives over time and how do things that might be thought about as solutions or products, they’re really tools to achieve an objective. And so, how do all of those fit together in a very good way that is mutually reinforcing and not overly complex so the client can really, you know, understand what it is that they’re doing and how it all fits together.
So, I think a great wealth advisor is someone who brings deep expertise in how to do that. How to work with a client using a planning mindset is what I like to say. We have a variety of diagnostic planning tools that we use with our clients when they are looking at possible objectives and paths to get there. And there’s an important thing. You know, you’re our chief investment officer at Wilmington Trust. So, optionality is something you’re quite familiar with in the investment sense of the word.
But I like to think of planning as the way of showing people possible futures and saying let’s look at your options. Let's think through different objectives. And in this post-pandemic period people are, as we said, reevaluating their futures. And so, having a great wealth advisor who can think comprehensively, and who can pull experts in as needed as you work through a plan and possible outcomes and options I think is really, really important.
And you also mentioned trust, which I think is critical. And I think trust really comes from two things. One is the institution that the wealth advisor is a part of. Some of the institutions in our business, in the wealth business, are held to a fiduciary standard and some are held to a suitability standard. And a fiduciary standard is the highest standard possible of care, which means that we must in everything we do put our client’s interests before ours, whether it’s pricing, whether it’s making an investment recommendation, or helping to think through a plan.
So, our culture as a company is all around the fact that we are a fiduciary advisor and that we are here to put the client’s interest first. And there are many, in fact most of the advisors in the industry do not operate under a fiduciary standard. They operate under a lesser standard, which is called the suitability standard, which just means, you know, are you recommending something that’s reasonable, but not necessarily in the best interest of.
So, that I think is one characteristic to look for when you're trying to find someone you can trust. What kind of firm are they a part of and what is the ethos or the culture of that firm? The second aspect of trust I think is really the advisor themselves individually and that’s something clients I have found, a pretty good sense of. Is this someone who doesn’t have their own agenda that they’re pushing on you? They’re trying to get you to buy some product or they’re, you know, maybe they’re getting a sizeable commission on something, so they really want you to do it.
The advisors that you can really sense trust in are advisors who, A, are credible. They know what they’re doing. They’ve got a lot of expertise. They’ve got a lot of experience. But, very importantly, they’re operating in a way where they’ve really kind of released their agenda and put their self-interests on the, you know, far in the back and are really willing to work with clients in a way that puts their interests first.
The final thing I would say on trust is that I always value advisors who are willing to tell me the things I don’t want to hear, who will tell me maybe I'm spending too much money relative to the portfolio I’ve got and the length of time I'm likely to live, or that I'm trying to push the envelope too much and take too much risk relative to my personality type or some ways I’ve behaved in the past. So, I also value advisors who are there for you proactively and are willing to take on tough discussions where maybe I'm not going to be the most receptive and they’re brave enough to do it because it’s in my best interest.
TONY ROTH: I guess that’s really the difference between wealth management on the one hand, true wealth management, versus investment management or banking or trust and estates is that the wealth manager really needs to pull everything together. They need to deal with the complexity, and they need to do it in a way that is really unbiased and where they’re an advocate for the family.
DORIS MEISTER: Yeah. That's exactly right.
TONY ROTH: So, one of the ideas that I’ve alluded to and I think that you’ve alluded to is this idea of complexity. The world has, become more complex than it ever has before and we have possible very significant changes in the estate tax arena, even including maybe elimination in step up in basis. We have income taxes changes, possibly capital gains rates more than doubling. We have very, very unusual sort of political pendulum going back-and-forth in the country over the last, you know, number of Presidents and such, which seems to be really polarizing the country and causing people on both sides of the aisle to become probably more emotional about how they feel about their country.
It just seems like the world has gotten to a place where that kind of advice is even more important, because the world has gotten so much more complicated, and the markets have become so much more complicated. What’s your sense of that? Do you think that we’re at a moment where that kind of advice is even more precious, or do you think that it’s always been complicated?
DORIS MEISTER: Well, I think we’ve had runs of time where things have felt really good and less complicated. But I do agree with you that over the past 15–20 years, really since the crash in 2008, I almost feel like the country’s been struggling to find some sort of equilibrium and instead of coming together and having it all calm down and be good again, we’ve become very polarized and, as you put it, you know, there’s a lot of heightened emotion around everything.
I was at a dinner last night with a very interesting group of businesswomen and we were talking about how it used to be, how we used to be able to just have conversations and share different points of view and how now we all sort of just clam up because any comment you make that may not be in agreement with someone else may provoke almost a violent reaction or at least a very emotional reaction. And so, I do think you’re right, Tony. I think we’re in a very interesting geopolitical period of time in the U.S. and then also obviously globally. I think things have shifted quite a bit, right, with respect to China and our view of China as being an important part of the global economic engine to having perhaps a much more skeptical and cynical view of China’s role and its aspirations and what that means for the global economy.
Things move fast now because of technology. Markets move incredibly fast. And then again, when you look at the wealth divide in the U.S. and we’ve had periods like this, the late 19th century, certain periods during the 20th century where there have been big disparities between the wealthiest people and the people who are not at the top. And we are in one of those periods of time where you’re likely to get a big focus on government spending programs and taxes, etcetera. And I don’t see that changing given that economic disparity.
So, I think it’s a particularly important time for clients to have those advisors in their life, an advisor who can help them think through their way of navigating all this change and their way of staying on top of the changes as they evolve and figuring out what to do about them in their own personal world. So, I think it’s going to continue, and I think it’s a very, very important time to have access to advisors who can help you think through all the ramifications of legislation and what it means for you personally today and for your family, as well as going forward.
TONY ROTH: I couldn’t agree more. And it’s been so interesting. We’ve seen so many clients make life decisions that they never anticipated would be even on the radar screen more than a year ago whether it be changing careers, ending careers, relationships, migrating to different parts of the country, all changing the way they live.
Doris, one of the things that’s really, I think, been a signal change in life and how we live is technology. And when you think about technology in the wealth management industry does that create opportunity for wealthy families or does it create risk for wealthy families or both?
So many families maybe feel the need to act, to do things on their own through the technology. But maybe that also creates risk for them. How do you see that playing out for families and our clients. The go-it-alone approach could also create missteps for families? How do you think that’s unfolding?
DORIS MEISTER: Yeah. Well, I think technology has evolved as an additional channel, if you will, or platform that clients want to be able to access 24/7 to look at where they stand, obtain information, carry out transactions, etcetera. And you’re right, Tony. There is a segment of the market that is more do-it-yourself, where clients are very much, you know, I don’t want to pay fees, I really want to figure this out on my own. And when clients have less complex financial situations, that usually works, or it can work. There have been a lot of tools developed to help clients do that.
However, what I have experienced with clients over the 25 years, you know, I’ve been in the business and in the past let’s say 10 to 15 where technology has become a more and more important channel or platform is that there are times in people’s lives where they really want a sounding board and personal advice. So, maybe they’ve just discovered they’re going to be going through a divorce or they’ve become suddenly widowed or they lose a job or they say I want to spend more time with my family, I want to retire three or four years earlier. Those situations lend themselves to personal advice, to reaching out to a trust advisor with who’s got a lot of life experience and has seen a lot of clients go through similar situations and face similar kinds of decisions. So, they understand both the emotional and the factual side of going through decision making like that.
I think advisors also have the planning and diagnostic tools that you and I talked about earlier that are incredibly helpful when clients are going through a life event or a life change. So, clients tend, in my experience, to reach out and want that personalized attention, someone who knows them, who knows their situation and can really help them make their decisions and forge maybe a new path.
I would also say that the market environment is another factor that tends to propel people to reach out to a sounding board or to go for personalized advice. When the market really was heading down last spring, which we all remember, related to the pandemic, it became a time when people were not only feeling physically threatened by the virus but were feeling financially threatened perhaps by what was going on with the world, the economy, and the markets. And in periods like that, clients really, really want, again, someone to help them see through the immediate, be less emotional, and help them really think through what a good path is to kind of get—weather the storm and get through it without significantly hurting their wealth, which is what tends to happen if you start reacting emotionally in extreme circumstances. And all the behavioral finance work has clearly outlined all the reasons why that is. I mean human beings are wired to do the wrong thing when they are under extreme stress.
So, I think from a financial point of view, technology’s here to stay. We are investing a lot in technology. We want our clients to find it very helpful and there for them when they want it. But we are also continuing to invest heavily in personal advice and support, and for our most complex clients, heavily proactive outreach.
TONY ROTH: Yeah. It’s just echoing some of the things that you’ve said, I’ve always sort of analogized financial health to physical health. I’ll be pretty upfront with you. I'm a hypochondriac and I'm always looking at WebMD or the next thing, figuring out what’s wrong with me. But at the end of the day, I'm probably going to go to a doctor, because I don’t trust myself to use the technology to get a good answer. And I think that people generally feel as passionately or almost as passionately about their financial health as they do their physical health. And that’s where the trust comes in, because they know that they’re not perhaps expert.
And, Doris, the other thing that you’ve said that love to hear what your thought is where technology has been so, I think from an analytics standpoint, valuable to us is around that behavioral finance where we’ve really worked with our clients to dimension for them and their plans sort of this idea of drawdown exposure we know that the markets are high, even today just as they were prior to the pandemic. We know that they’re going to go down again. And the question is can we prepare our clients for that so when it happens, they actually know they’re on a plan. And they can rest assured that things will come back. And I think the technology has helped that.
DORIS MEISTER: Yes, absolutely. That's absolutely right. I love to see when clients take an active interest in learning more about the capital markets or investments or financial issues. They—you know, I think today many consumers are much more informed about options and prices and, you know, the cost of a mortgage or the cost of investing. And technologies help that along and I think that’s really great, because actually the clients who are the most educate in a way are clients who are far easier to deal with when it comes to getting to a decision point, because they feel like they’ve looked at a lot of options.
Now, there are plenty of clients who really look to us to, you know, be a source of information and even in the way we portray information, the way you and the Investment team put together our investment thinking and our outlook, we rely on a lot of different people on a lot of sources, right, Tony? We’re not just in an isolated world where we think we have all the answers.
So, I think technology has benefited all of us, whether you’re on the advisor side or the client side, to make a lot of information available very, very easily. And that has helped all of us bring a lot more knowledge to the table when we’re faced with making really tough decisions.
TONY ROTH: Doris, there’s a topic I really wanted to explore with you, which is the idea of the amount of wealth that’s being transferred from the Baby Boomers to the Millennials. We have this unprecedented amount of maybe $30 trillion of wealth that will go through that process. And one of the most interesting facets of that is that the younger Millennial generation really has a very distinctive value-based approach to life and living and it really brings in what we call ESG investing and thinking about the planet and the diversity of people and responsibility as investors.
And I'm wondering, as the interest of ESG is increasingly funded by money passing to the younger generations, how do you see that trend impacting the wealth management business and even the economy in terms of the allocation of capital? It seems to me that it’s an incredibly important trend and would love your thoughts on that.
DORIS MEISTER: Yeah. I think, Tony, you know, both you and I in the work we’ve done have seen an accelerated interest in ESG, social impact investing, in really the past two to four years. It’s been a subject of interest for a long time. But I think what’s happening is it’s now becoming real. And I think you're right. I think the Millennials are a big influence on that and I think as wealth does transfer over the next decades from the older generations to younger generations, I do think this is a trend that’s here to stay.
We have our version of ESG investment strategies and as it used to be the thinking that you would give up return for those types of investments. And I think we’ve proven that you can get both; you can get return and you can fulfill your values in the way you invest. And I do think this values approach is something that is basically a good thing.
You and I work with a lot of families and a lot of multi-generational families and you can see how the values system infuses the generations. So, it’s incredibly powerful, just as it is in any kind of ecosystem, whether it’s a corporation or a government or a country or a family. Values systems tend to prevail and set the tone. And I do think there’s a definitive shift where not just—it’s not just talk anymore. There’s more action in terms of investors really putting their money into these types of strategies and also being able to do so in a way that doesn’t mean they have to give up return in order to be able to fulfill their values.
TONY ROTH: And, Doris, what’s a family to do that is listening and perhaps isn’t engaged yet in ESG or wants to be more intentional around educating the next generation on those opportunities that are out there? How can families engage their—the younger generations in that kind of development, values, and thinking about those?
DORIS MEISTER: Well, you know, it’s interesting, Tony. As you know, we’ve invested quite a bit in what we call our next generation advice and capabilities here at Wilmington Trust. We really view our client as the family and each and every client is a family, and we want to be able to help that family address the needs of every member of the family. And I think bringing the younger generation along, there’s been a lot of talk in the business about very wealthy families preparing the children for the money so it doesn’t dis-incent them and create problems.
But I think in getting the next generation to be interested in finance and their financial future and investing, it’s a wonderful way to get the next generation started. And our advisors look very favorably on those kinds of opportunities to take the children within the family through a little mini-bootcamp on what is investing and what is ESG.
So, again, when you have fiduciary-oriented advisors who genuinely put the client’s interests first and really care a lot about the clients they serve, they really care about those kids and want those kids to have the benefit of knowing how to manage their own financial lives. And, obviously, everything has to be age appropriate. I mean as they get older it’s more and more important that they understand how to use a checking account and establish credit and how to run a budget and have a financial plan. So, the ESG piece is a very intriguing way to get a lot of Millennials and younger generations to engage with investing and learn more about investing, because they’re doing it in a way that appeals to their values.
TONY ROTH: I mean over the years, I’ve had any number of families I can remember, Doris, that have I think been able to bring their lower generation into both the investment space and into the development of their values through their foundation or through their charitable giving programs.
DORIS MEISTER: Absolutely. Philanthropy is another very, very important way. And some clients, you know, do that, right Tony, by every year they give each child $1,000 or each child $500 and get them on Foundation Source and have them figure out, you know, what causes do they believe in or what themes or areas of philanthropy are they most interested in and have them start to engage in seeing the power of money when it’s put to good use.
TONY ROTH: Yeah. It’s powerful stuff. Well, this has been a terrific conversation. So, let me wrap up. There’s so many different takeaways.
I think the first, Doris, is that when a client’s looking for a wealth advisor, more than anything they’re looking for what I think you would call a trusted partner, which means that the wealth management firm is really in the business to advise and advocate for the family and by doing so they really achieve the best outcome possible for the family, not just as an investor or a banker or trust and estates lawyer, but really for the family as an integral unit. So, that’s one thing.
The second is that I think that there has been a real increase in the reliance on digital tools and I think that they can provide certain significant value-adds, but also one needs to be careful because they could present pitfalls. And from a value-add standpoint, it can be a very, very convenient way to consume financial services, get access to information, and even to help with building plans using tools that we didn’t have before, like drawdown exposure, for example. But at the same time, clients have to become, I think, very self-aware not to become too isolated or become too self-reliant when there are skills or expertise that are relevant and may not, if they do – if they do it alone, they may not be able to spot all the issues, much less solve them. So, technology’s great but it needs to be used in the right way.
And then lastly, coming back to the idea of a plan is that the idea of a plan has always been pervasive in our business in wealth management. That hasn’t changed, and it still is just vital to have a comprehensive plan to lay out your objectives and to understand where you’re going and how you’re getting there, both from an investment standpoint, tax standpoint, a spending standpoint, retirement standpoint. It all comes together in the right kind of plan.
So, Doris, thank you again for your insights. It was wonderful having you and I'm sure that if you're willing, we’ll have you many more times in the future.
DORIS MEISTER: I would love that, Tony. Thank you very much.
TONY ROTH: I encourage all of our listeners to subscribe to Capital Considerations on Apple Podcasts, Spotify, Stitcher, or your favorite podcast channel to ensure you get updates on future episodes. Thank you all for joining us today.
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