(This article was originally published Wednesday.)
--State's oil boom is creating more millionaire households that
need financial advice
--North Dakota now ranks 29th in millionaires households per
capita
--Advisory firms hope more advisers are willing to move to the
state despite cold weather and lack of infrastructure
By Matthias Rieker
For two years, Wells Fargo financial adviser Melissa Moulton
would commute from Sioux Falls, S.D., to western North Dakota,
spending two work weeks a month with clients who needed advice on
how to handle their newfound wealth.
She kept getting invited to weekend barbecues and fishing
excursions, so she decided to make a permanent move up north. "I
saw an opportunity to reach new clients," Ms. Moulton says.
Today, advisory firms such as Wells Fargo hope there are more
advisers like Ms. Moulton willing to take a chance on a state
getting richer but where advisers are scarce.
The state's historic oil boom, and businesses from trucking to
restaurants that benefit from it, are creating more millionaire
households that need financial advice.
Advisory firms, however, are struggling to find advisers willing
to move to North Dakota, which is famous for its remoteness, icy
winters and largely treeless landscape. As a result, many firms are
servicing the state from afar.
"No question, there is a need for some more financial advisers
out here," says Brian Johnson, an adviser in a Tioga, N.D., branch
of Investment Centers of America. The firm, headquartered in
Appleton, Wis., manages $13 billion in assets.
Mr. Johnson resorted to hiring his 23-year old son Eric, who is
studying for his securities brokerage license. Until he receives
it, Eric is helping his father with secretarial work.
Investment Centers hired about 15 advisers in North Dakota last
year and is looking to add another five to six this year, says
Chief Executive Greg Gunderson. The firm's goal is to position its
advisers in branches of local banks, rather than its own
offices.
"It's been a long time coming for North Dakota," he says, citing
the state's increasing wealth.
Wells Fargo's private-banking unit moved three advisers into the
state last year and hired another. Now the San Francisco-based bank
is looking to add three more advisers in western North Dakota, says
Bryan Johnson, a regional managing director at Wells Fargo Private
Bank.
North Dakota ranks 29th in millionaires households per capita,
up from 46th place five years ago, according to Phoenix Marketing
International. Maryland ranks No. 1., and last year, North Dakota
had the biggest increase in such households from 2012, the research
firm says.
As of March 31, 1,589 investment advisory representatives and
72,803 stock brokers were registered to do business in the
state--an increase of almost 40% for both groups over the last five
years, says Karen Tyler, the North Dakota securities
commissioner.
"We really have seen a steady increase in the number of
registrants here, but not necessarily domiciled here," she
says.
The reasons why not enough advisers are moving into the state
vary.
Consultants say advisers are generally not a mobile group, and
many might not have fully recognized the opportunities in a state
whose population is growing and becoming wealthier.
Of course, "there is the weather, it's small towns," says Well
Fargo's Mr. Johnson, referring to the most obvious complaints about
the state. Another turnoff that advisers cite is a scarcity of
certain services--such as shopping stores, entertainment, and
schools.
Nevertheless, Ms. Tyler says she isn't worried about the growing
number of out-of-state advisers helping investors in North Dakota.
After all, complaints haven't gone up, she says.
"With technology and access to information, it wouldn't be
surprising" to see investors choosing their money to be managed in
the state and outside, Ms. Tyler says.
But Wells Fargo decided two years ago that moving people to the
state and hiring there makes more sense than commuting advisers,
Mr. Johnson says.
Parachuting "was working, but we weren't that effective with
it," he explains. "We have really seen a pick up in momentum since
we added to our staff."
It takes a special kind of adviser to move to North Dakota and
service a clientele that is more conservative, and more independent
minded than elsewhere, advisers and consultants say. It also might
take some practice to detect the millionaires.
"The dress code out here is basically jeans, boots, and a
hoodie," and many are in their 30s, Mr. Johnson says.
Also, advisers must be more than investment managers--they need
to be versed in the ways and methods of the oil and natural gas
industry.
"You have to understand the mineral rights versus the surface
rights and who owns what," Mr. Johnson says. "You don't want that
deer in the headlight look."
Clients often take a portion of their new wealth and invest it
in what they know--that is more oil wells or in land. "A financial
adviser who does well in that state will be more about asset
protection than about asset growth," says James Dean, the head of
the financial services practice at consulting firm WealthEngine
Inc.
Patience is required, experts say. Clients who gain wealth
quickly often need more time to make investment decisions, and
don't respond well to sales pitches, says John Nersesian, chairman
of the Investment Management Consultants Association.
"These people have broken their backs," he says. "They are not
necessarily interested in turning their money over to an adviser.
They want to be involved."
Write to Matthias Rieker at matthias.rieker@dowjones.com
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