Writer: Eleana Teran
2 min read March 2023 – As the financial industry navigates through turbulent waters, wealth management services have emerged as a critical component in personal finance management. An increasing number of individuals are seeking guidance on the current financial landscape, resulting in a surge in demand for customized financial planning and investment management solutions. Chady AlAhmar, CEO of Wealth Management for Old National Bank, and Connor Oak, Senior Associate – Wealth Management at WorkOptional Private Wealth Management, share their thoughts with Invest: on the importance of understanding clients’ unique financial goals, the growing trend of incorporating ESG in clients’ portfolios and their insights into the long-term viability of alternative investment options.
Chady AlAhmar, CEO of Wealth Management for Old National Bank
What have been some of the biggest shifts in demand for your services that you’ve seen?
There are now expectations around technology that didn’t exist a few years ago. For example, it was believed that older clients were not as open to technology, but they are now leading its use. They want the capability to have video conferences but also know that they can meet in person.
At the same time, across the industry, we are seeing that clients are opening accounts with more than one institution. Whether they have an ETF account or want to invest in Bitcoin, we are seeing a trend where they still want a primary advisor who can look at all their accounts and cover more than just investing. Many of our clients want to see lending as part of their investment strategies and address tax implications. People don’t come just for one niche, but they want a one-stop shop where we can aggregate all their accounts and provide holistic advice.
Connor Oak, Senior Associate – Wealth Management at WorkOptional Private Wealth Management
What are some of the strategies you are advising your clients to help them navigate through the current economic landscape?
Being a smaller firm, and handling a smaller client base allows us to spend a lot of time with each client and maintain constant communication with them. We prioritize managing expectations and helping our clients stay disciplined, especially at a time when the media can be divisive. We also strive to be more inclusive overall and adapt to changes in the market and economy.
We operate in a niche space within wealth management as an independent firm. We focus on providing a holistic approach to traditional wealth management for our clients. Our approach includes not just managing client portfolios but also keying in on tax strategies, estate planning, insurance planning, business succession planning, and overall retirement planning. We strive to give our clients the knowledge and tools they need to achieve financial independence and the ability to enjoy the various stages of life. Additionally, we try to stay informed on the latest policies and changes in the economy to adapt and keep our clients informed. We hope to act as personal CFOs for our clients and help them understand the technicalities and terms in our industry.
How are clients incorporating ESG strategies into their portfolios?
AlAhmar: We construct customized portfolios where ESG is top of mind. We don’t sell canned ESG solutions because the definitions of ESG vary among clients. For example, one client might care about wind energy or solar energy while another cares about social justice. ESG is a huge umbrella where we do see interest and demand, but because the definition is very broad investing solutions must be customized to every client.
Also as a reminder, we are true fiduciaries. So, if a client wants to invest solely in wind energy, our job is to make sure they consider more diversified strategies. We optimize and maximize our client’s investments, so while we can adjust a portfolio to include more wind-related investments, we still need to provide unbiased fiduciary advice. If a client is very interested in a particular solution, we encourage them to use it as a consumer or use their proxy vote as a shareholder.
We recognize that ESG is very important from an investment structure. For example, a company that is not involved in social justice can be more at risk of being sued or having issues. We take all these dimensions into account when constructing a balanced investment portfolio. We must make decisions considering this as well because we want to do what is best for our clients.
Oak: That’s one area where we, as a firm, are continually learning. The majority of our clients are in the baby boomer or Gen X age groups. ESG investing is a relatively new concept to them, and sometimes it can be a challenging conversation to have. Historically, clients have come to us and may say they don’t want to invest for example in tobacco companies or companies with a large carbon footprint. But now, with ESG, there are ways to invest in companies while still aligning with their core values. ESG is not a one size fits all way of investing. There are a wide variety of tools available from different major platforms, to benchmark portfolios on ESG, with different ratings and scores. As the concept of ESG has grown, we have had to be cognizant of some of the limitations of ESG including the term “greenwashing,” where companies and institutions have used ESG as a form of misinformation used to entice the green consumer. So, when we take on a new client or refer them to someone, one of the things we have done throughout our 20-plus-year history is to ask about their goals and values with interactive tools such as a vision board. Now, with ESG, we can show them something tangible in that arena, whether it be a scorecard or another metric. Overall, ESG investing is also evolving from just no military, no tobacco investments to include minority- and women-owned funds.
What are your thoughts on cryptocurrency and NFTs as long-term investments?
AlAhmar: It is a new trend but it is the wild west right now. We just saw FTX implode. I mean they had an arena in Florida named after them, they were a major sponsor of Lewis Hamilton and the Mercedes team in Formula 1 and still, they collapsed almost overnight. Our stance is that crypto is here to stay, and blockchain technology is interesting, but right now it is a bit of a gamble. Many of our clients own Bitcoin or other types of crypto. Many times, we can help them with strategies to sell and repurchase while taking advantage of some of the tax implications and capital gains even though we don’t currently invest in specific currencies.
Some of the funds that we invest in can have exposure to blockchain technology in general. My advice is that those who want to invest in crypto can choose to do so, but it should be play-money at this stage. I wouldn’t advise having a big part of their preservation of wealth in that area. On the other hand, NFTs are still uncharted territory, it is like investing in art, we don’t discourage it but do advise on their exposure.
Oak: Cryptocurrency has been making waves in the media as of late. From our perspective, we have fielded a lot of inquiries from clients, ranging from those who are very knowledgeable about cryptocurrency to those who have little understanding of it. We have had to educate ourselves and our clients on the subject, especially given the recent price fluctuations and media coverage. In my personal opinion, there are a lot of bad actors in the cryptocurrency and blockchain space. We try not to predict the price of cryptocurrency for our clients, just as we wouldn’t do so for any stock or mutual fund. Additionally, we are cautious and hesitant when clients approach us about investing in cryptocurrency, as it can be a risky asset class. However, we do recognize the potential uses and benefits of cryptocurrency, and we consider it to be in the alternative assets class. We hope that as the industry matures, bad actors will be sorted out, and the government and cryptocurrency exchanges/companies will work together for the common good.
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