When considering ease of integration, advanced planning finished a distant fourth (Exhibit 2). One can understand why, given the difference between getting a margin loan, often a matter of one phone call, and putting together a comprehensive wealth management platform that might entail, for example, correcting a flawed split-dollar plan. Wealth management is far from a snap. But the added effort can lead to a greater profit margin.

Finally, as Exhibit 3 shows, the consultative nature of advanced planning that can make it highly challenging and complicated also creates an opportunity to extend a relationship in ways that the other sets of services do not. The advanced planning process includes profiling clients and their coming to understand how they feel about such personal issues as their children (through an estate plan) and their charitable legacy (through philanthropic giving). The intimacy and problem-solving orientation add up to a deeper client connection, which can, in turn, lead to a stronger relationship, greater profitability per client and more referrals.

Of course, a wealth manager does not adopt advanced planning to the exclusion of the other three sets of services; every affluent client will need each of them at some point. But these other services are not necessarily integral to the shape and profitability of the wealth management model. They are, therefore, subsidiary to the core model, in a sense subsets of wealth management, but ones that can further burnish a wealth manager's credentials by allowing him or her to summon and guide other top advisors to the affluent.

A Closer Look

Having established that advanced planning is an essential part of the wealth management model, because it can result in more revenue and a deeper understanding of the affluent client, it's time to take a closer look at precisely what it entails.

As such, advanced planning comprises the following four interwoven components:

Wealth enhancement-the tax management strategies such as contingent swaps and private placement variable life insurance that can improve overall investment performance;

Wealth transfer-personalized and tax-efficient estate planning using such tools as credit-shelter trusts and life insurance;

Asset protection-risk management strategies such as liability insurance and disassociation to protect assets from litigants, creditors and family members; and

Charitable giving-meeting personal philanthropic inclinations with opportunities for wealth enhancement and transfer such as a private foundation, donor-advised fund or charitable remainder trust.

Connecting With Clients

Keep in mind that advisors aspiring to be wealth managers would not have to be able to personally deliver each of these components. They would, however, at the very least have to demonstrate a broad understanding of each and an idea of how and where they fit into the wealth management model, and also to have access to a professional network that can handle the implementation.