As we examined last month, private wealth specialists can help you with those special cases where you require more comprehensive analysis using a higher level of expertise to implement effective solutions. These advisor-to-advisors form specialized teams to solve investment, estate planning, taxation, insurance, and business-ownership issues for your high-net-worth (HNW) and ultra-high-net-worth clientele.
The private wealth specialist coordinates the work of other experts. Efficiency and thorough implementation–areas where traditional planning processes often stall–are two key elements of how top private wealth specialists work. The third element is high performance collaboration.
The Movie-Making Model
Al Gibbons–a CLU, ChFC, and AEP–of AEG Financial Services in Phoenixville, Pennsylvania, is a highly respected expert on advanced estate planning techniques who has spent many years working with advanced planning teams. When describing how top advisors collaborate on a case for a high-net-worth client, he describes a movie-making model. “If I were to make a science fiction movie, there are special talents that I need to bring to the set in order to accomplish that goal, and so we would assemble that team,” he says. “We’d make the science fiction movie and then we disband. The next month, I’m doing a documentary. That requires a whole different series of challenge than the first one.” Advanced planning works the same way.
When he and other experts work as part of the team, it’s not the same team all the time, since clients at this level have distinct, complicated needs. If he’s doing an insurance transaction, then his job is to make sure that that the asset performs the way it’s supposed to perform. When the group completes its main work together, he does have continuing responsibilities to monitor a life insurance solution to make sure it performs the way it should, for example.
It’s Your Client
When experts form a project group or join an existing one, the owner of the client relationship should be clear to everyone. The private wealth specialist who is coordinating the effort doesn’t own the client, nor do the experts, although all must act responsibly within their regulatory or fiduciary requirements. Ownership of the relationship always resides with the original advisor whose pre-existing relationship with the client makes the opportunity possible.
“There has to be a lot of trust between the advisors,” says Gibbons. “There has to be a platform for mutual respect. And when you have that platform and mutual respect, you don’t have competing egos.” You want to select your advisors based on reputation and credentials–and willingness to be a good team player. What you don’t need in a team is one or two advisors striving for control of the client, which can happen if the expert isn’t experienced in working as part of an advanced planning team.
“I don’t argue with people,” adds Gibbons. “I don’t try to manipulate them. I don’t try to sell them. It’s important that the client is also a partner in this process. In the end we have a solution that everybody buys into. It’s not confrontational. It’s not a salesman approach pushing something that’s not appropriate for the client.”
Advising the Advisors
Arthur Bavelas, president of Resource Network Ltd. in Radnor, Pennsylvania, (and a consulting principal to my firm, Advanced Planning Group) is a private wealth specialist, solving client problems brought to him by financial advisors. Recently a client worth $60 million with complex real estate holdings needed to update his estate plan. Issues included leaving a legacy, structuring future transactions to conform to prudent tax and estate strategies, cash management, and liquidity. Bavelas brought in real estate attorneys and an accountant to structure a few financial transactions. Bavelas then called in Gibbons to analyze survivorship life insurance needs, facilitate the underwriting, and to implement the transaction.
In some situations, the role of the expert is to evaluate a solution already under consideration by the client. One client’s attorney called Gibbons last winter about a pending insurance transaction suggested by someone we can call Salesman X. The attorney was skeptical about the value of this solution and wanted a second opinion.
At first the client situation appeared relatively straightforward: net worth above $50 million with a simple balance sheet. The details, however, revealed something else. If both the husband and wife died, their estates would have severe liquidity problem–a shortfall of up $15 million in cash to pay estate taxes.
Salesman X’s recommendation didn’t resolve the clients’ problem at all. In fact, the suggested transaction was actually against the law in the state of New York, where they lived. Given the client’s exposure, Gibbons felt the urgency of the problem and knew he had to act quickly and facilitate an appropriate solution.