Estate planning: There are many ways to effectively and cost-efficiently move wealth across generations. For advisors serving the ultra-affluent, some of these approaches will have built-in money management requirements.
The ultra-wealthy want their advisors to be able to minimize their estate taxes and at the same time help prepare heirs for the challenges of taking on considerable wealth. If you can use legal structures such as trusts to do both things, your work will be greatly appealing to this segment. (And again, you can bring your expertise in professional investment management to bear.)
Marriage planning: Love doesn’t always last forever, and when new spouses join a family, there’s always a risk that the marriage could end early and the spouse could absorb much of the wealth created by others. Advisors who want to make themselves useful to ultra-wealthy families can find ways to protect that wealth. One common approach is to use prenuptial agreements, but these aren’t always popular because people see them as projecting failure on a marriage before the fact. So other approaches might be more effective—using trusts, for example, or otherwise “locking up” assets so that the financial advisors are the ones managing them.
Comprehensive exit planning: Clients are often business owners looking for ways to either sell their businesses or hand them over to a new generation. Most traditional exit planning concerns itself with taking direct steps to sell or otherwise go through a transition. But more involved wealth planning means the advisor has a role both long before and long after the sale is completed. In many situations, pre-sale wealth planning can leave more money in the hands of the owners once the company is sold. After the sale, there are usually liquid assets and assets in structures, which all can benefit from the services of an astute financial advisor, especially one bringing investment management expertise along. Such planning can leave the business owners much wealthier in the end.
Asset protection planning: Many ultra-affluent investors are also very interested in protecting their assets from possible frivolous lawsuits. The advisor’s aim is to use legally accepted concepts and strategies to ensure a person’s wealth is not unjustly taken.
An extensive and intricate set of strategies and financial products can be used to legally shield a person’s assets. The advisors and clients will have to figure out how much control they want to have over the assets and the possible consequences of being sued when they are determining which approaches to employ. Some of these asset protection solutions also have a money management component.
Charitable tax planning: The tax code encourages philanthropy, and wealth planning can take advantage of this—but only if the clients are charitably oriented in the first place. If they aren’t, there are generally other ways to get similar financial outcomes without giving.
But if they are, charitable giving also comes with money management components for the advisors—particularly when they are called upon to manage charitable trusts.
Wealth Planning Forges Connections to Ultra-Affluent Investors
Another reason wealth planning is so important to ultra-wealthy clients, beyond investment management, is that it helps them deal with family matters.