What many wealthy families get wrong about ‘great’ wealth managers

The wealthy, like most others, seek to work with great advisors who are experts in their field and can deliver exceptional results. In this category of great potential advisors are wealth managers who can help them optimize their financial world. The complication is: “What makes a good wealth manager?”

Technical and process expertise
When researching wealth managers, a large majority of the wealthy focus intensely on one characteristic. They often conclude – incorrectly – that a wealth manager is excellent based on their technical skills alone. Certainly, the wealthy expect their wealth managers to be technically proficient and able to provide the full range of appropriate products and services.

According to Homer Smith, executive director of Integrated Family Office Practice and founder of Konvergent Wealth Partners, “Looking only at the technical capabilities of a wealth manager, there is a good chance that affluent clients will be disappointed. Of course, technical skills are extremely important. The affluent want to work with the smartest, most skilled advisors around. Nevertheless, some wealth managers who may be extremely technically competent are not necessarily the best advisers.

“Just as important as technical skills is the ability to understand the personal interests of the wealthy, what we call the human element,” says Vince Annable, CEO and founder of VFO Advisory Group and author of The Household Endowment Model: Wealth Planning. for Affluent families. “The human element involves the personal and emotional components of wealth management. This involves understanding everything and everyone important to a client, as well as everything and everyone who might be affected by financial decisions, and using that understanding as the basis for making financial recommendations.

Case study: At the request of an ultra-wealthy entrepreneur, I was hired to assess his existing succession plan. The objective was to determine whether the plan would still produce the expected results. I put together a cohesive team of specialists to help break down the succession plan.

As part of the human component of the process, questions were asked that revealed a hidden problem. In the existing plan, the patriarch went with “even” instead of “just”. Each child was to receive an equal share of the estate, including the company, even if only one of the four children was involved in the business. The entrepreneur described two of his children as “doing nothing” and “worthless”.

Due to some changes in family dynamics since the estate and estate plan was signed until today, the new likely outcome after the death of the business owner would be an all out war between his four children. The family dispute could also lead to the bankruptcy of the 200-plus-year-old family business.

Helping the entrepreneur think through the situation with a focus on the human element resulted in a new estate plan and well-structured estate and asset protection plans.

In this case, the actual estate planning – the technical aspects of the initial plan – was done extremely well. This is mainly because the wealth manager and legal professional who came up with the plan were very technically savvy. The problem was that some key interpersonal family relationships and related circumstances had changed – a fact that was only learned by focusing on the human side of planning.

The result is that the child involved in the business will inherit the business. The other children are supposed to get comparable amounts of wealth but in different forms.

According to Anthony Glomski, director and founder of AG Asset Advisory Family Office and author of Liquidity and You: A Personal Guide for Tech and Business Entrepreneurs Approaching an Exit, “Great wealth managers are technically highly skilled. But that’s usually rarely enough if the goal is to optimize the financial worlds of the wealthy. What is also required of a great wealth manager is the ability to discover the needs and wants, wishes of the concerns of the wealthy. Great wealth managers are technically and people savvy.

Russ Alan Prince is the Executive Director of Private heritage magazine and one of the leading authorities on the private wealth management industry. He consults family offices, quick-and-rich entrepreneurs and selected professionals. Connect with him on LinkedIn.com.

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Dolores W. Simon