The private wealth industry is tilted in favor of the professionals—wealth managers, lawyers, investment bankers, money managers, accountants—as opposed to their clients. Much of this is because of the nature and historical foundation producing a structural advantage for professionals. In order to shift the scales to you, the clients, as opposed to the professional, you have to take control.
Homer Smith, founder of Konvergent Wealth Partners, and co-author of Making Smart Decisions: How Ultra-Wealth Families Get Superior Wealth Planning Results, states, “Most of the ultra-wealthy are poorly served by the private wealth industry professionals they rely on. All too often, ultra-wealthy families accept recommendations from professionals without clearly understanding the advantages and disadvantages of the proposed wealth management solutions. This need not be the case. While the professionals benefit from structural advantages, by asking specific open-ended questions and knowing what to listen for, clients can more effectively identify high-quality, client-centered professionals and ensure they are continually doing the best job possible.”
It takes initiative and a certain amount of vigilance to make sure you are getting superior wealth management results. What are superior wealth management results? It means you are getting wealth management solutions that effectively address your needs and wants cost-effectively and are not missing any meaningful opportunities.
It is common for the wealthy to get good results but pay excessively for them. It is also essential to understand the value you are receiving from the professionals you engage, as many tend to focus on their capabilities and not on what matters to you.
According to Frank Carone, chairman of Oaktree Solutions and co-author of Everyone Wins! How You Can Enhance and Optimize Business Relationships Just Like Ultra-Wealthy Entrepreneurs, “In selecting and working with professionals, it’s all about value. Are the results you are getting a multiple of what you’re paying for them? Unfortunately, many times, the results are inappropriately costly. Complicating the fact is that when it comes to the private wealth industry, it can be hard to determine the cost-to-value ratio. Still, there are ways to determine if you’re getting a good deal. And, we believe, it’s critical that you know how to ensure you’re getting great value for your money.”
At the same time, a large percentage of professionals fail to really understand their wealthy clients leading to missing out on significant wealth-enhancing or wealth-protection solutions. “Many professionals are siloed,” says Smith. “They fail to see all the possibilities, usually because they and their team lack the requisite expertise. They have a hammer, so everything must be a nail. To get superior wealth management results, you need to be very careful who you choose to work with, and then you have to control the process.”
The scales are slowly shifting in the private wealth industry. Some talented professionals are pulling back the curtain and helping the wealthy make better financial decisions. These are the professionals you need to work with.
Russ Alan Prince is the executive director of Private Wealth magazine and chief content officer for High-Net-Worth Genius. He consults with family offices, the wealthy, fast-tracking entrepreneurs and select professionals.