WealthPlace.com (WP), launching in September, will serve as a portal site to reach clients more interested in preserving wealth than in how much a flat trade costs on an online brokerage transaction.
"The size of the market for individuals with $10 million or more in the U.S. is approximately 270,000 households," points out WealthPlace CEO Mark Ostroff, who has been in the private client/wealth management business for some 17 years, at firms like Goldman Sachs, Merrill Lynch and Morgan Stanley Dean Witter, "and WP is a financial services company targeting one audience."
WP will provide 24-hour, secure access to information on products and services that address the unique needs of those with an unwieldy amount of funds to put to work: venture capital opportunities, asset allocation advice, tax strategy, cash management, high-end lifestyle and trust and estate planning services will be among those available. The firm will also maintain a bricks-and-mortar operation in New York City.
"I think that there is going to be a tremendous amount of wealth transfer in the next few years," says Larry Tabb, analyst, the Tower Group, "and there is concern among high-net-worth individuals about trust and estate planning, tax issues, general wealth preservation issues. And so these individuals will look for firms that can integrate technology with good old-fashioned service--these are the firms that will succeed in that marketplace."
Tabb points out that similar launches, including myCFO.com, and initiatives by Charles Schwab & Co. and Merrill Lynch also cater to high-net-worth individuals. "The issue here was that consumers in this demographic, to some extent, felt frustrated because of their unique financial planning needs--their unique requirements demanded more than a generic, plain vanilla treatment."
Among the financial-planning services and brokerages that have moved online, says Tabb, "initially, the big challenge was just to deal with scale, with performance and security of transactions. But these companies discovered that with high-net-worth clients, commissions are less important--services became far more important. And there are still huge opportunities in this particular space."