At the Alchemia Group we are helping our clients think & act differently in regards to their wealth and its impact on thier family - because we know it is more than just numbers and plans, it's the Balance of Art & Science with Pragmatism and Vision.
I try to stay away from technical posts as I believe good advisors will design a technical solution based on the goals you have for your Family Wealth Plan. Over the past couple of weeks I’ve witnessed three potential train wrecks where a promoter who wasn’t an advisor attempted to sell a family on an idea involving life insurance that, even to them, seemed almost ‘too good to be true’. I think there is an important lesson in this about developing the skills of being an excellent client. In prior posts I’ve talked about wealth ownership skills as opposed to wealth management skill and I’ll revisit that in the near future. I think there is a strong parallel with having good skills as a client.
It all starts with mindfulness, observation and questions. Someone is referred to you or you are approached by a person with some credentials about an idea, insurance policy or tax strategy. What do you do?
First, spend 10 minutes researching them online. If their website is sloppy (and I have seen some really bad ones) with spelling errors, no real contact information and a lot of pointing to one product or one idea there may be an issue. If someone identifies themselves as an investment manager or advisor and there is no regulatory information on the site there is a problem. LinkedIn should also give you some insight into experience and work history. In today’s world ’non-presence’ online (or, worse, ’bad presence’) is a big warning signal.
Second, if you decide to meet with them have prepared questions. Here is a sampling of some I’ve used when asked to help ‘vet’ an idea or transaction:
How did you come to be a________________________?
Tell me the history of your firm and the clients you serve?
What are your goals for your future?
What is your process for determining if my family and I are good candidates for your firm or idea?
Tell me how you manage and maintain the strategy once implemented?
How are you compensated for working with us?
And once you receive an actual proposal – How much will you be paid this year if we implement this idea?
The answers should be clear and understandable without a lot of jargon or evasiveness.
Third, and this is important, talk to your trusted advisors as soon as possible, even if you think there may be a conflict (e.g. an insurance idea that your current provider did not present). If the transaction is large be prepared to hire an expert in the area to review. At worst doing this will be a small mistake versus the potential large mistake.
Last, look at your own motivations for considering the strategy. Too often a focus on the tax benefits can obscure both the true risks and the real disconnect between your real goals the proposed strategy presents.