three key components for helping clients achieve financial success.
by anthony glomski
just like starting a business or building a practice, most of your successful clients know that nothing truly valuable is free or easy. same goes for their pursuit of financial freedom. it will take hard work, discipline and smart thinking to overcome and solve those challenges.
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but what most type-a business owners, executives and professionals don’t realize is they don’t have to do it alone. that’s where you come in as your client’s most trusted advisor. will you be ready when they reach out to you for help?
if you’re familiar with a process called collaborative wealth management – many of your peers are not – then you’ll be in excellent position to be your clients’ go-to source of advice for the next chapter in their lives. collaborative wealth management is designed to help hard-charging entrepreneurs, execs and professionals get their financial lives on the right track – and stay there.
sure, all kinds of financial services people like to call themselves “wealth managers” or “wealth advisors,” but only a small fraction of those folks really are. more on that in a minute.
wealth management is about having all of your clients’ financial challenges answered and having their entire financial situations enhanced. collaborative wealth management goes beyond simply investment solutions. it addresses a wide variety of financial needs that clients have throughout the many phases of their lives – including before and after they experience a liquidity event. true collaborative wealth management enables you to help clients organize and manage their money so that all the components of their financial lives work together toward one purpose – achieving the goals they have for themselves, their families, their community and the world at large.
“wealth management” defined
just because someone says they provide wealth management services doesn’t mean they can actually deliver it. ask 10 so-called “wealth managers” to define what they offer and you’re likely to get 10 different answers – and most explanations will be heavily focused on the standard investment management services that everyone else provides. in most cases, these standard services are not enough to make a meaningful difference in your clients’ total financial picture.
true collaborative wealth management is designed to solve a full range of challenges that affluent entrepreneurs face on an ongoing, long-term basis. most importantly, collaborative wealth management coordinates all aspects of their financial lives that must be addressed if they are hoping to build a secure and meaningful future.
collaborative wealth management accomplishes these objectives in three important ways:
- using a collaborative process to gain a detailed understanding of your client’s deepest values, goals and most important financial wants and needs. a collaborative approach allows you to help clients clarify what is most important to them and to craft a long-range and measurable wealth management plan that’s designed to meet those needs and goals. the process is designed to foster an ongoing and dynamic relationship between you and your client to ensure that their needs continue to be met as their lives evolve over time.
- going beyond basic investments to use customized solutions to fit a client’s unique needs and goals beyond simply investments. the range of interrelated financial services and tools might include, for example: investment management, advanced retirement planning, insurance, estate planning, business and exit planning, pre-liquidity planning, charitable gifting, and wealth protection.
- implementing these customized solutions in close consultation with your client’s other professional advisors. wealth management enables you and your clients to coordinate efforts closely with other trusted advisors on an ongoing basis to identify specific needs, and to design custom solutions to help clients meet those needs.
three key components
wealth management consists of three key components, summed up in the formula below that specifically addresses and solves the most pressing financial challenges that successful people face:
wealth management (wm) = investment consulting (ic) + advanced planning (ap) + relationship management (rm)
let’s take those components one at a time:
1) investment consulting. this deals with the overarching concern shared by most successful entrepreneurs and their families: to make consistent, smart decisions about their finances. investment consulting aligns their financial assets to their goals, their return objectives, their time horizons and their risk tolerance. it is the foundation upon which a true collaborative wealth management solution is created.
through investment consulting, you can address what is perhaps the most pressing specific financial issue faced by successful people – wealth preservation. they want to keep the money that they have worked hard to earn – and not have it unjustly taken from them.
2) advanced planning. this component addresses a broad range of important financial needs in five key areas beyond simply investing:
- mitigating taxes: enhancing wealth by, among other things, reducing the impact of taxes on a client’s bottom line and decreasing their borrowing costs. as a cpa, tax mitigation is right in your wheelhouse, but you may not have thought about it within the broader concept of advanced planning.
- transferring wealth: determining how a successful client’s money can best support their children, grandchildren and other family members, as well as the causes they care about – all while minimizing taxes paid to the government.
- ensuring that assets are not unjustly taken: protecting the money successful clients have earned by safeguarding it from creditors, lawsuits, vengeful ex-spouses and other parties that could seek to possess their assets.
- maximizing charitable giving and planning: helping successful clients leverage their money to magnify the impact they can have on their community and on society at large.
- defining the next chapter of a successful client’s life: this is about helping them formulate a plan for remaining relevant and engaged, and for having a purpose.
these non-investment-related concerns above are hugely important to your clients’ long-term financial success. yet these concerns are often overlooked or viewed (incorrectly) as secondary concerns – even by financial professionals. indeed, research from ceg worldwide indicates that a mere 6 percent of financial advisors (one out of 16) deal with their clients’ advanced planning issues. therefore, very few advisors address these five concerns above in any systematic, comprehensive way.
3) relationship management is the third and final component of collaborative wealth management. it requires you to think like the quarterback of a client’s financial life. to fulfill that role, you may have to get outside your comfort zone a little by assembling a team of specialized financial experts and coordinating their efforts on your client’s behalf.
this team of experts could include attorneys, accountants, business consultants, valuation and risk specialists, and even financial therapists. no two client situations are the same. relationship management is essential to building and maintaining a collaborative wealth management process. when done right, it can provide your client with a full range of expertise and “bench strength” that’s designed to address the complexities of their wealth. very few clients, no matter how smart and hardworking, have the bandwidth and connections to assemble a team of experts like this on their own. that’s where you come in. this is where you evolve from tax preparer/practitioner to personal cfo.
our experience working closely with cpa firms has demonstrated the power of joint venturing and strategic partnering. it greatly increases the revenue of the accounting partner and amplifies the value for the client.