your wealth management team needs these five people

details on each, plus 10 other specialists to consider for occasional circumstances.

by anthony glomski

entrepreneurs and other successful people typically have complex and varied financial needs. the most successful among them typically work with five key professionals on a regular basis (see below). these are the experts who have the capabilities to solve the majority of the investment and advanced planning issues your clients are likely to face as they pursue the next stage of their lives:

more: wealth management calls for a team of experts | how a virtual family office can serve your wealthy clients | is your client’s wealth truly protected? | control the level of risk | how to flip the switch to wealth preservation | three ways to work together on wealth | how to implement collaborative wealth management | five challenges of liquidating a business
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1. wealth manager
2. private client lawyer
3. accountant/cpa firm – ideally, a firm large enough to have multiple partners and a deep bench
4. life insurance specialist, who is knowledgeable about current estate tax mitigation strategies
5. property and casualty specialist

expert #1: wealth manager. wealth managers who use the collaborative wealth management process we’ve described focus mainly on helping investors grow and preserve their wealth through the investment consulting process. then, to help clients meet their advanced planning needs, these wealth managers develop strong relationships with the other professionals listed below.

remember: be wary of people who tell you they can do it all themselves. any wealth manager you work with should know enough about your client’s situation to recognize when there may be an opportunity to add value in any or all aspects of their financial lives. however, that wealth manager should always have a network of experts that he or she relies on to confirm those opportunities and build strategies. a wealth manager without a coordinated team of experts and a systematic process is likely in fact a financial advisor and investment advisor, despite what it says on their business card.

such an individual is set up to manage a portfolio and offer reactive advice. this is okay, as it’s a necessary role. however, this creates an opportunity for you to step in and act as their personal cfo (or perhaps coo of their virtual family office for clients with more complexity).

expert #2: private client lawyer. a private client lawyer is a hugely important member of your advisory team. a private client lawyer can address many of the tax, estate planning and business/legal needs of successful professionals as well as entrepreneurs who are experiencing (or anticipating) a liquidity event. a skilled private client lawyer will be adept at providing services like these:

• estate planning
• asset protection planning
• income tax planning
• succession planning
• business planning
• developing customized and bespoke charitable strategies
• protector and trustee
• developing and maintaining legal structures for virtual family offices

ben’s story

clearly, a lawyer who can provide these types of services can bring tremendous value to your client’s situation. take ben, for example, who has a special-needs child named bobby. ben wants to ensure that bobby is taken care of after ben is gone. but ben also has concerns because his ex-wife, betsy, has a history of spending money on herself that was intended for bobby’s well-being. ben worried that the funds earmarked for his son would be “accidentally” misappropriated if he weren’t around to oversee them. the solution: ben’s private client lawyer set up a bulletproof trust to take care of bobby indefinitely – and to prevent any financial shenanigans by betsy or others.

expert #3: accountant. unlike a private client lawyer (who will provide a big-picture perspective on tax planning), you will typically have much more detailed, day-to-day knowledge of your client’s income tax and corporate tax situation. as a skilled accountant, you are able to make specific recommendations to mitigate your client’s tax exposure. this will help your client pay less to the government and address some tax planning and compliance issues. you can also recognize where to make savvy moves before and after a client inherits a windfall or has a liquidity event for their business.

there might be situations, as you’re well aware, that are outside of your day-to-day practice and which require you to bring in other accountants who fill specialized roles, such as conducting audits or preparing quality of earnings reports, etc. it’s very helpful to have those specialists on your bench as needed and your clients will hold you in higher esteem by knowing you have access to such elite talent.

as the general manager of the professional network of expert resources, you have three primary roles:

1. to select qualified professionals for the network
2. to meet with the network of experts to develop ideal strategies for your clients
3. to manage the network of experts on an ongoing basis so that these professionals are always aware of each client’s current financial situation, needs and goals

expert #4: life insurance specialist. a top-quality life insurance specialist will know how to identify various approaches to mitigate your client’s estate taxes and to develop tax-deferral strategies. this specialist will often work closely with a private client lawyer to identify and structure solutions that leverage a full range of options.

example: there’s an insurance solution that acts like a “wrapper” into which your client can transfer assets – thus eliminating a tax hit that could strip them of 45 percent (or more) of the gains on their wealth. in addition, this solution can provide asset protection and enables your client to access their assets tax-free during their lifetime. this customized wrapper allows for the inclusion of low-cost investment options (for example, vanguard offerings) as well as other investments such as high-yield bonds, hedge funds and other investments that tend to be very tax-inefficient otherwise.

note – most life “insurance salesman” loathe this option. why? because the lion’s share of the fees and commissions have been eliminated. these are customized solutions and aren’t necessarily right for everyone. but for your clients who fall into the virtual family office level of the hierarchy (generally entrepreneur with a minimum net worth of $10 million and up), this is something that should be explored.

helpful hint: the next time your client is evaluating an insurance product with an insurance agent, ask the agent if there is a comparable product that would pay a lower commission. if you picked the right team member to act as your insurance specialist, she will already be making you aware of that option. you need an insurance specialist, not a salesperson.

expert #5: property and casualty specialist, also known as a personal lines insurance specialist. this is a property-casualty agent who works at the very high end of the market. some of the biggest gaps in a successful person’s financial situation involve property and casualty insurance. finding an agent who takes a holistic view of a client’s total risk situation is incredibly valuable. a proactive agent will reach out to your client to check on key changes in their life such as constructing a new home. they will also look for savings. we saw quite a bit of this during the covid-19 crisis, and the clients feel very well taken care of by this effort.

often there are big gaps around coverage such as umbrella policies that don’t cover all of a client’s assets, resulting in potentially millions of dollars in exposure.

example: a visitor falls inside your home and fractures their leg.

if it turns out the fall is because of your negligence (rather than the visitor’s), you could be liable for that person’s medical bills, as well as their pain and suffering, regardless of whether or not that person has insurance. property and casualty insurance protection that’s provided by the homeowner’s policy can help cover these costs, so you won’t have to pay out of pocket.

it is important for high net worth families to evaluate their coverage needs in all of the following areas in order to prevent potential gaps or oversights:

property – provides protection against damages to real and personal property, including loss for diminished value and loss of use. property insurance can include homeowners, renters, flood and/or earthquake coverage. significant gaps in coverage may occur if you rent out your property, even occasionally.

automobile – provides protection against damages or theft of a vehicle. coverage is available for a wide range of vehicle types. expenses for injuries to yourself or others, as well as injuries or damages caused by an uninsured motorist, are also covered.

umbrella – also known as excess liability, this type of insurance provides coverage above the limits of homeowners, automobile and watercraft policies. the coverage level should be increased as your client’s wealth and earning power grow. it should be high enough to cover the full value of the family’s assets.

recreational vehicle – provides coverage for watercrafts, aircrafts, snowmobiles, jet skis, motor homes, travel trailers, etc.

workers compensation for household staff – provides benefits for workers in the home, such as nannies, housekeepers, cooks, personal assistants, etc., as directed by the laws of the state of residence.

directors and officers – provides protection for legal action against directors and officers of non-profits, businesses or other organizations.

specialized product – policies that provide protection for unique or unusual assets, hobbies or lifestyles. this includes coverage for identity theft, private collections, kidnap and ransom, cyber liability, and so on.

additional experts to consider when needed

beyond the five foundational experts who make up the core of your advisory team, there are other professionals that you will likely need to work with occasionally – or maybe just once when you are going through a liquidity event or other key transition in your life.

• investment banker can determine a value range of a business by doing a market test, expand the list of potential suitors for your client’s company and help structure and negotiate the terms of the sale.
• credit expert can evaluate your current situation with one or more loans you are carrying and help you consolidate and/or reduce interest payments.
• derivatives specialist deals with concentrated stock positions.
• securities lawyer may be needed to support the derivatives specialist.
• actuary can be needed if you are dealing with certain life insurance issues.
• valuation specialist may be needed to appraise your business interests as you develop a succession plan with various types of specialized trusts.
• fine art professional for help with acquisition, disposition, protection, valuation and tax mitigation related to the sale and transfer of your art collection.
• financial therapist may be important for helping you deal emotionally with a dramatic and sudden increase in wealth (and the insecurities it can unleash).
• family governance professional can also be vitally important in dealing with family wealth issues that impact your clients and their loved ones.
• health and wellness professional provides global concierge health care services as well as comprehensive longevity programs.

depending on your clients’ unique requirements, you may need to bring in other types of experts to address their highly specific challenges. that said, you don’t need to have close relationships with every one of these experts or to try to oversee them all. instead, you should be able to rely on your five core team members to bring in these experts as needed.

posted on january 29, 2024