A complete financial plan requires a proper mix of investments, insurance, tax planning and legal work. Because it is difficult — even impossible — to be competent and properly licensed in all these areas, professionals often take a team approach to financial planning. Financial advisors, accountants and attorneys each bring a unique perspective that can be beneficial to a client.
See also: 8 Estate Planning Mistakes to Avoid
Unfortunately, a team approach can often lead to scheduling conflicts, differences of opinion, ego battles or personality conflicts that can bog down the process and create frustration for everyone involved. The purpose of this article is to help readers improve their ability to work as a team in developing a sound financial plan for their clients.
As a financial planner and estate planning attorney, we’ve spent many years refining a team-oriented, cross-functional approach to advising clients. Here we’ve captured several typical situations that illustrate the need for better coordination between the advisors clients look to for help in building their financial future.
- A financial advisor spends considerable time and effort creating an investment policy statement and a diversified portfolio for a client to later discover that the client’s attorney or CPA disparages one or more product recommendations without understanding the financial planning that has taken place. A situation like this can lead to stagnation. Stagnation — doing little or nothing — is seldom good for the client.
- An attorney creates a legal structure and later discovers that the accountant is reporting the taxes inconsistent with the legal documents.
- A financial advisor recommends investments that would otherwise be appropriate but are not suitable within a certain legal structure. In this era where suitability is so critically important, working with an attorney can add an extra layer of oversight and protection.
- An attorney or CPA discusses investments or insurance without the education, training, licensing or proper perspective.
- A single professional provides advice in his or her area of practice while ignoring the other professionals’ areas, leaving large gaps in the plan.
- A client attempts to save money by preparing his or her own tax returns or legal documents or investing in a manner that is unsuitable for his or her objectives and/or lacks proper diversification.
Building your team
The first and most important part of developing an effective team approach to financial planning is to select the right team members. Like they say in sports, the key to becoming a great coach is to find great players.
Great players are sought after because they fill a specific role, have the right experience and ability, and can fit together within the team. To help shed light on how the process works for building a team of advisors, the following are ideal characteristics that Ray, as a financial advisor, looks for in estate planning attorney partners:
- Specializes in trusts and estate planning and has a reputation for doing customized work and staying up on the latest developments.
- Will put a fence around his/her costs and not nickel-and-dime the client.
- Is timely in action and will not drag the process out.
- Is open to ideas and not egocentric.
- Is honest, ethical and conservative in his or her recommendations.
- Understands and appreciates the need for open discussion and is accepting of perspectives that are new or even different in order to accomplish the goals of the client.
- Clearly delineates what the client can expect and the type of service that is offered.
The following are traits Lee, as an estate planning attorney, looks for in financial advisor partners:
- Asks the right questions, listens attentively to the client’s objectives and gives advice based on a written plan that describes how the plan meets the objectives.
- Takes a holistic approach to financial planning; understands the big picture; addresses the entire situation and not only a part of the client’s financial situation.
- Recommends a product mix based on the client’s wishes and the client’s best interest, not the planner’s preferred products or the highest-commission products.
- Is willing to spend time educating the client about the issues, helping the client understand the plan and helping the client organize documents pertaining to the financial plan.
- Does not try to be the attorney and give legal advice.
- Is open to learning new ideas and developments.
- Understands and appreciates the need for open discussion among advisors and is respectful of the opinions of other advisors and their unique perspectives.
- Is willing to question other advisors or give contrary input (in private) when something doesn’t appear to be appropriate for a particular client.
- All fees must be transparent.
The following is what we both look for in a CPA:
See also: The Right Way to Find a CPA
- Not a “yes” man. We want a CPA who will share an honest opinion and who is willing say “no” to a client when appropriate.
- On the other hand, we don’t want to work with a CPA who says “no” to everything or tries to be the expert in other disciplines. We want a CPA who respects the opinions of other professionals (especially on matters in their own discipline) and is willing to discuss ideas with an open mind.
- We look for a CPA who is proactive in planning and issue-spotting for clients — and in bringing in other professionals when appropriate — rather than simply reporting a client’s taxes.
- Naturally, we look for a CPA who is willing to be a team player.
Working as a team
In addition to these qualities, it is critical that all team members be committed to following through on assignments, plans and actions.
When advisors have a significant difference of opinion, it is important that they discuss it together in private rather than in front of a client. Although we each owe the ultimate duty of loyalty to the client, we should respect team members by addressing differences with them rather than going behind their backs.