True Wealth Management – Raising the Bar!
October 22, 2019
Throughout the financial world you can find a plethora of investment philosophies. With so many options, I know it’s best not to shoot from the hip. We believe the best way to capture the ‟tailwind” of increasing broad markets over time is to keep your portfolio expenses very low, broadly diversify and let the markets do their magic. Find a Financial Adviser whose investment philosophy is in alignment with your beliefs. This is only Investment Consulting not True Wealth Management and if Investment Consulting is all you are getting from your adviser you are being short changed” so read on.
Only about 6% of advisers offer True Wealth Management which goes way beyond Investment Consulting. It can be described best by the formula: WM = IC + AP + T
WM = Wealth Management
IC = Investment Consulting
AP = Advanced Planning
T = Teamwork
Now let’s break down this formula to get a better idea of what constitutes True Wealth Management.
Investment Consulting: The preferred approach is a multi-meeting process – typically 4 meetings. The first step is the Getting to Know You Meeting which serves as an icebreaker. We strive to understand what the prospective client is trying to achieve along with ensuring our financial philosophies are in alignment, and that we would enjoy working together. If both parties feel they have a ‟fit,” we schedule the Discovery Meeting. Here we learn in-depth all about the prospect’s situation. Ultimately this meeting empowers us to gather the information needed for the next step – The Investment Plan Meeting when we provide a comparative analysis of the investor’s current portfolio versus our recommendations. This includes a totally transparent disclosure of fees and expenses. Our goal is to be absolutely clear in explaining our recommendations and how the client may benefit by working with us. Then, if appropriate, we schedule a Mutual Commitment Meeting to bring the client’s investments into alignment with our mutually agreed investment plan. No more ‟shooting from the hip.”
Advanced Planning: This is what the other 94% of advisers are not offering. Why? Because it is a lot of work for them and they can make more money by just gathering more assets. What follows is a cursory summary of the four key elements of Advanced Planning. If you want more detail, I suggest you read my book. You can get it here.
- Wealth Enhancement: The focus here is to leverage as many legitimate tax-saving opportunities as possible by being proactive when it comes to your taxes. For example, let’s say you sold a piece of real estate and realized a $100,000 gain. If you had an investment position with a loss, you could ‟harvest” the loss and possibly wipe out the taxes on the real estate gain. This is mitigating income taxes. There are rules of course and your tax adviser should be consulted. The point is you should keep your financial adviser informed and he should be proactive.
- Wealth Protection: This is about keeping your money safe and out of the hands of thieves and protecting yourself from unfair lawsuits. Asset protection safeguards can vary greatly from state to state. Keep your Financial Adviser in the loop and remember, If it sounds too good to be, it probably is. When appropriate, you should consult with a qualified attorney who understands the laws in your state. Your Financial Adviser should provide the referral and negotiate fees in your behalf. The adviser should also attend the meeting and… not charge anything extra for these services. Remember, he is already being paid for managing your financial assets.
- Wealth Transfer: Knowing what you want your legacy to be for the people you love and the causes important to you should be the basis for your planning. Don’t ‟muck it up!” Avoid probate if possible. The court-supervised process of probate can take more than two years in some cases and the fees your estate encounters can aptly be described as ‟legal high-way robbery.” Every family is different and there is no ‟one size fits all” solution to wealth transfer, but knowing your options allows you to find the right path forward for your situation. Financial advisers don’t provide legal advice. Only a lawyer can do that but… a great Financial Adviser can provide education and save you thousands in legal fees. A great Financial Advocate will do this at no extra charge and negotiate the lawyer’s fee in advance on your behalf.
- Charitable Giving: In my view, the most important aspect of charitable giving is making sure your wealth will be deployed wisely to help others in the way you intended. One of my very wise friends once said, ‟Walter, if you are going to be charitable, do something that actually helps someone.” So, look into the charities you donate to. I recommend using GuideStar® or Charity Navigator and looking for an efficiency rating of 75% or better. In addition to the legacy you leave, you will have the satisfaction of knowing you are making a positive impact on the world. Charitable giving also opens the door to tax-saving opportunities, so keep this in mind while you work on your Charitable Giving Plan.
Teamwork: Collaboration and teamwork make the dream come true! The Financial Advocate serves as the Wealth Management team leader because he is the only team member who can afford to provide this service and not charge for it. Balancing and optimizing every aspect of a client’s financial situation can be complex and may require a team of experts in many disciplines including but not limited to business law, estate planning, tax planning, real estate and investment management, etc. As we have seen, there is a lot more to excellent wealth management than just investing. I believe all Financial Advisers should offer these services and not charge for them. I’m trying to raise awareness of what you and the people you care about should receive. If your adviser doesn’t offer these things, I recommend you find an adviser who does. Inform your friends about this and remember, You Are The Boss. Take Control of Your Financial Destiny.