{"id":114945,"date":"2023-08-07t11:57:39","date_gmt":"2023-08-07t15:57:39","guid":{"rendered":"\/\/www.g005e.com\/?p=114945"},"modified":"2024-08-27t17:01:40","modified_gmt":"2024-08-27t21:01:40","slug":"why-stress-testing-matters","status":"publish","type":"post","link":"\/\/www.g005e.com\/2023\/08\/07\/why-stress-testing-matters\/","title":{"rendered":"why stress testing matters"},"content":{"rendered":"

\"\"four steps to take.<\/strong><\/p>\n

by anthony glomski and russ alan prince<\/i><\/p>\n

the everyone wins process is at the center of how you can maximize wealthy client relationships. most often, this is a function of aligning interests. the process is also core to generating new business from these clients and other professionals. the ability to add value often plays a significant role in being referred by other professionals to their best clients.<\/p>\n

more: <\/b>six ways to offer financial products<\/a> | family offices come in three types<\/a> | how everyone can win<\/a> | nurture referrals from wealthy clients<\/a> | four steps to a high-net-worth practice<\/a> | why tax planning matters so much to the wealthy<\/a>
\n\"goprocpa.com\"exclusively for pro members. <\/span><\/strong>log in here<\/a> or 2022世界杯足球排名 today<\/a>.<\/span><\/p><\/blockquote>\n

at the same time, there are many different ways to frame your conversations based on the self-interests of the wealthy to optimize their financial worlds and accelerate results. stress testing is one of those ways.
\n
\nfrom the perspective of the everyone wins process, stress testing incorporates knowing your self-interests (including the services and possible financial products you can provide), developing a deep understanding of the world of wealthy individuals coupled with direct alignment. stress testing reveals areas of concern, and some of those areas will likely lead to you providing you or your firm\u2019s expertise.<\/p>\n

stress testing<\/strong><\/p>\n

stress testing starts invisibly as you ascertain the self-interests of the wealthy. through the discovery process and by being empathetic, you determine if some of the actions they have taken might not produce their desired results. if there is the possibility a wealthy individual knows what they did was inaccurate or insufficient or \u2013 more likely \u2013 is unsure, you can more formally engage in stress testing.<\/p>\n

at the same time, you are finding out if the wealthy individual is indeed getting or employing the best solutions for his or her unique circumstances. what is commonly the case is the wealthy simply do not know. because of this uncertainty, many of the wealthy are inclined to look to you to help them evaluate better solutions than the ones they are employing.<\/p>\n

it is worthwhile to recognize that stress testing is widespread among the super-rich. it is something high-performing single-family offices are regularly doing for their extremely wealthy families. for them, stress testing is a very clever way to make smart decisions and verify that they will likely get what they want and confirm they are dealing with high-quality professionals.<\/p>\n

the following are the four steps to stress testing.<\/p>\n

step #1: understand the self-interests of the wealthy individual:<\/strong> this is always necessary and central. you need to know \u2013 the big picture and the particulars, what is important and what is not.<\/p>\n

step #2: determine what he or she wants to accomplish:<\/strong> always, results matter. therefore, you want to understand the outcomes they require and desire. at this point, it is not about how to get there; it\u2019s about where there is.<\/p>\n

step #3: evaluate the actions taken and actions that are being considered:<\/strong> once you understand what they want to accomplish, you and whatever experts you need evaluate what the wealthy clients are doing. here, you will also collect and analyze the appropriate documentation.<\/p>\n

as part of these evaluations, you need to work on the assumptions. underlying their actions are often a plethora of assumptions. in stress testing, these assumptions get systematically modified to determine how the solutions will work when the \u201cwhat ifs?\u201d of the scenarios change. it is not uncommon for professionals seeking to sell their services and products to use somewhat optimistic assumptions.<\/p>\n

additionally, you will calculate the cost structure. the intent is to have the best and most cost-effective solutions possible. when calculating cost structures, all the expenses, including long-term costs, should be specified and transparent.<\/p>\n

step #4: determine if alternative actions are superior:<\/strong> based on the evaluation of the existing actions, alternative solutions might be considered. you show how your recommendations help the wealthy to achieve their self-interests. as exhibit 1 shows, there are five basic courses of action.<\/p>\n

\"data<\/p>\n

examples of stress testing with the super-rich<\/strong><\/p>\n

stress testing can be all-inclusive where you look at everything going on in a wealthy person\u2019s life. most times, stress testing focuses on a particular issue or circumstance or something they have done, such as their estate plan or the way they have structured their business interests. the following are three examples of stress testing with the super-rich.<\/p>\n

customized premium financed life insurance:<\/strong> a billionaire family purchased life insurance on several family members to address succession issues and to potentially generate significant investment returns. the solution was a highly customized multilayered premium life insurance transaction that delivers many hundreds of millions of dollars in death benefits at an astoundingly low cost and completely tax-free investment returns.<\/p>\n

involved in the transaction were:<\/p>\n