The process involves selecting investments, deciding what to sell in order to raise funds for the purchase, identifying the best location for the investment (including employer-sponsored plans), and then taking into account any individual client circumstance that may impact implementation.

Individual tax situations differ greatly among high-net-worth clients, and there are a lot of moving pieces that require an individualized approach. While this means more work for advisors, explaining how the changes are implemented also provides additional opportunities for increased client contact.

Not every advisor who would like to adopt this approach is in a position to do so. The methodology requires frequent trades and individualized implementation plans; the downside is that it's not practical unless an advisor has a small base of high-net-worth clients and a support staff capable of implementing complex strategies.

Assessing Changing Client Circumstances
With all that has gone on over the past four years, it is our responsibility as advisors to help clients reassess their financial circumstances and objectives, make appropriate tactical portfolio adjustments and help them regain confidence in their investment approach.

Clients today have a renewed interest in the "nuts and bolts" construction of their portfolios. Increased media coverage of global events and their impact on market volatility also contributes to more intensive client questioning. I believe it is a positive development for advisors and the financial services industry. We become better advisors when we can explain the rationale behind our approach and how what we are doing helps clients become more comfortable with their investments.

Everyone suffered a significant hit to his or her financial plans as a result of the financial crisis. Lives have been changed, and while the financial impact may not have been as overwhelming for most high-net-worth clients, they have nonetheless been seriously affected. Their homes are worth far less, with home equity eroded or disappeared, their positions or professions may now pay less, they may not be getting expected bonuses and their 401(k) and investment accounts have shrunk.

Given this interruption of their financial well-being, clients must be made to understand that a paradigm shift may have to occur in the way they view their future. They need to take a step back and reassess their circumstances. As advisors, we have to facilitate this fundamental change in how they think.

We need to have hard conversations with them regarding the long-term impact of their diminished financial situation. Can they still retire as planned at age 45 or 50 or will they have to work longer? Will their investable assets still generate sufficient cash flow or will they have to adjust to a lesser lifestyle in retirement? Will they have to amend their estate plan or gifting wishes for their heirs or favorite charity? Can they still help send all their grandchildren to college?

These can be agonizing decisions, and it's vital for advisors to openly address how this new reality will affect the lives, financial objectives and future plans of their clients. We are currently engaged in difficult conversations with clients about whether their goals are still realistic and whether changes might be necessary in order to meet them. Clients must understand this new environment and how it will continue to affect them.

Although these conversations are challenging, they are absolutely necessary to a successful client-advisor relationship. If we are to be true advisors to our clients, we are obligated to tell them what they need to hear, not what they would like to hear.