Lenox Advisors is a multi-office family office based in New York whose advisors act as “personal CFOs” to a roster of high-net-worth clients, 60% to 70% of whom are “Wall Streeters–bankers, traders, CEOs, CFOs,” says one of the firm’s six partners, Tom Henske. Henske, whose designations include CLU, ChFC, and CFP, led his Universityof Virginia soccer team to three NCAA championships in the early 1990s. At Lenox, he provides advice to clients, especially in estate planning, and oversees the firm’s technology and marketing efforts. He spoke with Editor-in-Chief Jamie Green about taxes, HNW clients, and the Lenox approach, in March.
Q: I’m curious about the Lenox approach to tax planning.
A: Our angle is that the biggest cost to our clients is taxes. Especially if you’re living in New York City, and you’re paying north of 45% to 50% on your income taxes, which also holds true for short-term capital gains. Anytime we can help them save a dollar on taxes, that goes a long way in their minds.
We don’t prepare returns, and I don’t think we ever will, but we spend a lot of time discussing not only income taxes but estate taxes and capital gains taxes–for our clientele that’s what’s first and foremost in their minds.
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Q: Lenox works as your client’s CFO, so you’d be talking to their CPA even though you’re not doing their returns?
A: The plans that are the most successful are a collaboration of all the advisors to the client.
Q: Tell me about your clients.
A: Sixty to 70% are Wall Streeters–bankers, traders, CEOs, CFOs–and they’re business owners. They’re up earlier than they’d like to be and later than they’d like, and they’re too busy to take care of [the planning] themselves. They’re smart enough to, if they had 24 hours in their day or seven days a week. The bankers and the traders, they know what they know, but they also know what they don’t know.
Q: What are the big issues these days for your clients–is it the estate tax?
A: You’re right on the money. The big issues that clients come to us on are the estate tax–what the effect of the estate tax is today, and the effects of the estate tax in 2010, and what’s the likelihood that it’s going to change between now and then. How do you create a financial plan [with such] uncertainty for clients in their 30s and 40s? How do they agree to a plan for something that won’t hit them until–it used to be their 70s but now with life expectancy [increasing] it won’t be until their 80s, 90s, and maybe even 100? The solution is to create plans that stand the test of time no matter what happens.
Q: It also means that it’s not a static plan.
A: Right. In fact, a really good plan will work regardless of whether there is or is not an estate tax. I think that a difference between a good advisor and a great advisor is a planner who can think outside the box and create a plan that will work under multiple scenarios.