The things wealth managers must know to keep their wealthy clients feeling secure.

Note: This is the first in a three-part series on the growing area of wealth protection services for affluent clients.

    Our extensive work with wealth managers has allowed us to see a variety of practice models in action and monitor the evolution of the service offering over time. The heart of wealth management is the advisor's ability to deliver a broad range of services and products packaged in unique combinations as financial solutions for their affluent clients.
    Most practitioners have oriented their business around a core set of products that reflect the needs of their client base, and then supplement those core products with ancillary products and experts as needed. Generally speaking, the wealth management platforms we have observed have included the following types of services: brokerage, lending, asset management, philanthropic planning, wealth enhancement, tax planning, asset protection, estate planning and a range of lifestyle services. These lifestyle services often include financial education, collection acquisition and development, physical security, residence and vessel management, and travel and social coordination.
    The greater a client's wealth, the more concerned they are about managing  their significant tax burden. As a result, it is likely that a wealth manager will introduce advanced planning services into the relationship. Our research has also shown that as a client's personal wealth increases, so does their concern that they will become a target of unwanted attention from creditors, criminals, litigants, competitors and members of the media. Furthermore, they fear for their physical safety and the safety of their family members and close associates.
    Helping a client in these two areas requires a sensitivity to privacy and protection. For some time now, we have seen wealth managers that work with exceptionally wealthy clients, those with a net worth of at least US$25 million, focused on the integrated delivery of asset protection and security services across a client's extended business and personal network. The demand for these types of services is growing among the wealthy community, and we refer to the combination of asset protection and security services as wealth protection.

What Is Wealth Protection?
    Again, wealth protection isn't a new service but rather a more systematic coupling of two related and complementary services that is now becoming mainstreamed. Philosophically speaking, the two disciplines work together to ensure that everything valuable to a client-whether it's a person, a business entity or an heirloom-is protected. The following section provides an overview of each discipline as well as a brief comparison of the two service areas (see Figure 1).
    Broadly speaking, asset protection planning is the use of legal strategies and structures, which may require the use of financial products, to create obstacles and barriers for a creditor seeking to access  an individual's financial assets. The overarching goal is to motivate any adversary-such as an ex-spouse, a former business partner, a child or a disgruntled investor-to relinquish their efforts entirely or to settle on terms more favorable to the client. Some examples of asset protection strategies include:
    Traditional and extraordinary liability insurance
    Onshore and offshore self-settled spendthrift trusts
    Corporate structures
    Asset transformation strategies
    Complex installment sales
    Replication strategies
    Security services entail all measures taken to protect the client and the people and property most important to the client from criminals. This includes avoidance of and protection from violent crimes such as kidnapping and vandalism, invasive crimes such as theft and infiltration, and virtual crimes such as identity theft. Some examples of specific security services include:
    Close protection personnel
    Transporter services
    Identity assessments and checks
    Countersurveillance and surveillance services
    Safe havens
    Property and personnel "tagging"

Serenity In Advance Preparation
    With both service areas, it is most effective to plan in advance and take any necessary precautions before an incident occurs. However, many individuals only get serious about wealth protection after they have experienced a loss, been the victim of a crime or been entangled in a lawsuit. While there are certain circumstances when particular asset protection strategies can legitimately be employed after a creditor surfaces, these situations are rare. And to avoid complications associated with fraudulent conveyance, all planning must be in place prior to an occurrence.
    On the physical security front, advance preparation can help avert potential problems. Without that effort in place, a wealthy client will be faced with finding and retaining security professionals to assist with crisis management as the incident is unfolding. Security services can, however, be put in place at any time, and seasoned security consultants will know how and when to implement them as effectively and unobtrusively as possible.
    There is, of course, a critical psychological component to wealth protection that has been uncovered in our work with wealth managers, and that is the wealthy client's desire for the peace of mind that comes with knowing they have done everything within reason to actively protect their most important assets.

The Role Of The Wealth Manager
    Wealth managers are well positioned to facilitate the wealth protection process due to their holistic perspective on clients, which includes both financial and lifestyle needs. An effective wealth manager is familiar with their clients' biggest concerns and well versed in the details of each financial situation. This enables them to identify assets that may be at risk and the circumstances that can lead to significant problems, such as improperly or underinsured artwork. Furthermore, a wealth manager's generalist capabilities contribute some additional benefits-the ability to oversee the process without the myopic focus often exhibited by specialists, and the ability to maintain an equanimity that ensures the final solution is a combination of the strategies and services that are most appropriate for the client.
    While many professional advisors are familiar with the concepts and strategies behind asset protection and can begin the planning process, an array of other professionals likely will be required in order to implement the strategies; the same is true of security services. Wealth managers will find themselves operating as a "general contractor," bringing in outside professionals and niche experts on an as needed basis.
    For instance, attorneys will be needed to draft contracts and agreements and set up business entities, and products from insurance agents, derivatives specialists and credit providers are often needed to fund core asset protection strategies. The umbrella of security services includes a wide variety of things, and more often than not a wealth manager will work with a security consultant to identify the right service set and secure the associated specialists.
    Once specialists have been retained, a wealth manager often faces the most frustrating and thankless part of their role-coordinating the other professionals on behalf of the client's agenda and ensuring that they stay focused and work collaboratively with one another.
    While wealth management is comprised of two distinct disciplines, asset protection and security services work together to address different aspects of the same issue-the safety and security of the affluent. A wealth manager that can empathize with their clients' need for privacy, protection and security, and then provide the related services and support that will demonstrate an understanding of leading-edge wealth management techniques, strengthen their client relationships and reinforce their role as an essential partner. 

Hannah Shaw Grove is the author of five books on private wealth and advisory practice management. Russ Alan Prince is president of the consulting firm Prince & Associates.