There are significant opportunities to tie asset protection planning and investment management with select family security services. There are times when structuring the situation entails using certain kinds of trusts and possibly captive insurance companies. The result is a need for money management services.
Special Projects
Here the financial advisors are involved—to varying degrees—in project management. This is the catchall category for one-off engagements conducted on behalf of the wealthy.
A financial advisor, for example, in the service of an ultra-wealthy family with direct investments spanning the globe arranged—using an external expert—for a number of the family members to have multiple citizenships and, therefore, multiple passports. This made travel and international direct investments much easier for the single-family office. It also enabled the family to legitimately lower their taxes. For a few members of the family, it also lessened the problems they were having with intercontinental dating.
Some other examples of special projects include:
• Facilitating an adoption.
• Buying an island.
• Overseeing the construction of a 60,000 square foot mansion.
• Arranging the paperwork and facilitating the process for admissions to a private club.
• Supervising the forensic accounting Arranging for a family member to be “disconnected” from a self-harm site and then to receive top-quality treatment.
• Restoring the identity of a family member after her company was hacked.
• Monitoring the accountant keeping the books on a movie financed by the single-family office.
• Identifying and working closely with a tax controversy attorney.
The list of one-off projects can go on and on. The need to manage such projects comes up intermittently—and sometimes not at all. These are all singular events.
Using External Experts
What is critical to recognize is that the greater majority of financial advisors do not directly provide value-added services. Instead, these services are outsourced to specialists. At most, the advisors are providing some level of oversight and follow-up. Nevertheless, being able to access high-caliber specialists and refer them to affluent clients can prove extremely valuable for financial advisors. The basic process for selecting external experts includes:
• Specification. This entails determining as clearly as possible the types of value-added services to deliver. The support services noted above tend to be what most of the wealthy are concerned about.
• Identification. This involves specifying particular external experts for each value-added service. The most common way financial advisors find these providers is through referrals. These usually come from the various trusted professionals financial advisors are working with.
• Due diligence. This means vetting all potential providers. Due diligence is more and more done by carefully and often meticulously questioning the referral source, carefully evaluating references and sometimes even using investigators to check backgrounds and claims.
• Selection. This is where financial advisors understand the specific working arrangement, appraisal metrics, costs, time lines and so forth. This enables them to stay on top of the situation when they make referrals.
Implications
By providing top-of-the-line value-added services, financial advisors are positioning themselves as the “go-to” professionals for their affluent clients. As such, their ability to do more business as well as maintain and collect more assets to manage from their wealthy clients increases geometrically. Delivering value-added services is a very good way to mitigate the impact of relatively short periods of poor investment performance.
Value-added services such as comprehensive longevity programs and some types of family security projects can readily translate into more business for financial advisors. In these situations, investment management plays a crucial role, because those financial advisors bringing the value-added services to the affluent are usually the ones who manage the assets.
Value-added services can also be very effective in generating referrals. Affluent clients are much more likely to discuss their comprehensive longevity program with their wealthy peers than they are to discuss their investment portfolios. Moreover, the ability of financial advisors to differentiate themselves with these value-added services can be very beneficial when the advisors are cultivating referrals from centers of influence.
External experts deliver the value-added services. It is necessary for financial advisors to construct a set of specialists they have vetted and with whom they are comfortable. Moreover, these external experts must clearly understand that when and where appropriate, the financial advisor is involved.
In conclusion, the affluent are generally highly motivated to obtain various value-added services. This is even more the case as one goes up the private wealth hierarchy. Therefore, for many financial advisors, it would be advantageous to be able to provide these services through carefully selected external experts.