CEO Today is a monthly magazine with news, insight and features specifically aimed at CEO's in the global business marketplace.

Wealth Professionals Need to Communicate to Provide a More Valuable Client Experience

The athletes that made it to the 2018 winter games in PyeongChang, South Korea are elite in their respective events, but none of them can say they got to where they are by going it alone.

Turning an athlete into an Olympian requires dedicated efforts by coaches, trainers, physical therapists, nutritionists, sports psychologists, doctors, family and friends–the list can go on. Successful athletes harness their own unique talent but are buoyed by the expertise and support of these other professionals and individuals.

Wealth management is clearly in a different area than the Olympics, but the idea behind achieving success is the same.  Any financial advisory team, if likened to the coach or trainer, relies on relationships with other professionals to help deliver a complete and highly valuable experience for their high-net-worth clients–the Olympians of this example.

 

Pooling Knowledge and Expertise to Meet a Client’s Specific Needs

Just as an athlete wouldn’t expect their nutritionist to treat a sprained ankle, clients should utilize a team of wealth professionals to meet their various individual, family or business needs.

  • Individual financial matters require wealth managers, estate lawyers, tax advisors and insurance advisors to be sure that all individual needs are covered such as cash/budgeting, life and property & casualty insurance, tax planning, investments and estate & charitable planning.
  • Heads of families concerned with wealth planning and education, family governance and succession will typically require the same as the individual would above, but may also need specialized family consultants and advisors to help ensure that should something happen to the head of the family, that the remaining family members are well looked after and that a plan is in place to ensure the family values and legacy are implemented.
  • Business owners are similar to heads of families, but with an operating company, may need yet another set of specialists on the team to consider business succession, business taxes and can involve corporate attorneys, business consultants, bankers, merger & acquisitions advisors, tax lawyers or board members.

A physical therapist’s efforts won’t get an athlete to the Olympics without the combined efforts of a coach and personal trainer. Similarly, wealth management is not complete or optimal with just one advisor or specialist. Input from individuals at different types of financial and wealth management firms allows clients to get a full scope of advice rather than only hearing from people working under the same roof or from one vantage point.

 

Why is Communication Among Wealth Professionals So Important?

The benefits of multiple wealth professionals working on a high-net-worth client’s behalf are lessened if there is a lack of communication.

For example, if the client’s investment firm moves around some of their assets, it’s important that firm relay the information to the client’s attorney or accountant, as it may impact the client’s estate plan or tax structure.

Communication among financial professionals is also critical for instilling trust in the client. Wealth management can be convoluted, complex and overwhelming, which is why high-net-worth clients reach out to multiple outside experts for help. Athletes know they can’t go big without the right team behind them, but if their team isn’t communicating about how the athlete’s sore back could impact practice goals, there could be major consequences to that athlete’s performance.

The experts that high-net-worth clients rely on must talk to one another; otherwise, it can create doubt in the client that their money and future is truly in good hands and can also create mistakes or missed opportunities for the client if there isn’t good communication.

 

What Affects One, Affects the Other

There are very real scenarios in which collaboration between wealth advisors and accountants, or investment advisors and attorneys (and so forth) matters a great deal for client affairs and can pay dividends.

Take estate planning, for example – Based on 2018 estate and gift tax exemptions, an individual can leave up to $11.2 million to heirs and pay no federal estate or gift tax (a married couple can double this amount!). It’s important to know how much liquidity should be available to cover the estate taxes based on projections for the size of the taxable estate, potential liabilities or state estate taxes. If a client’s personal accountant, estate tax attorney, investment advisor and life insurance agent work together, they can properly project for those potential taxes, and collaborate on effective wealth transfer and tax reduction strategies to benefit the client in the long run.

Unfortunately, a recent survey from the National Association of Estate Planners and Councils showed clients overwhelmingly reported never engaging in a collaborative discussion with their various financial professionals. While clients may not realize the need for this type of engagement, it becomes incumbent on the financial professionals to make the smart move and open up discussions.

Collaboration Doesn’t Always Come Easily

When you’re an expert in your field, it can be easy to find yourself working in a vacuum. While a single advisor can oversee a multitude of client needs, there are likely always going to be areas that are just outside of that individual’s expertise, particularly as the world continues to change – such as new tax laws, new investment opportunities, etc.

It can also be easy for advisors to not truly collaborate with one another.  This can be due to lack of structure in regular meetings with the full team, lack of systematic sharing of information or unfortunately due to conflicts of interest in some cases.  Whatever the cause, one-off communications or notifications between advisors on a case-by-case basis are less useful for a client’s overall financial position and can leave some holes or missed opportunities.

A collaborative financial team has several overarching benefits:

  • More Holistic Financial Management. As mentioned above, handling financial matters on a case-by-case basis doesn’t provide the full scope that truly benefits a client. True collaboration brings different perspectives and advice to the table to apply that collective expertise to best interests of the client and ensuring that the advisors have good up-to-date information about a client’s situation and objectives help the team be more efficient about the planning opportunities that are relevant and those that are not.
  • Enhanced Expertise: At the core of any collaboration is a sharing of ideas to enhance the overall results. No harm can ever come from putting two or three minds together to provide input on the same situation, particularly if the common goal is client experience and strong advice.
  • Greater Trust: A client will develop a greater sense of trust in their financial management team if it’s clear they are working together for the good of that client’s financial future. Even if the client isn’t fully engaged in the process, the results of a cohesive team should be apparent.
  • Better Business: Any kind of shared knowledge helps grow expertise on all sides. Investment advisors and wealth professionals can leverage the collaborative process to better their own performance and attract more clients.

Understanding what actions are in the client’s best interests, taking the initiative to collaborate and build relationships that foster ongoing collaboration for client needs are at the core of successful financial management.

Remember, collaboration among financial professionals is about the client–not about how it can help you. The approach to financial management should always begin with, “How can we better serve this client?” and the answer generally includes a focus on collaboration.

 

Melissa Olszak, Partner and Director of Planning

Lake Street Advisors

Leave A Reply