Wealth planning is a comprehensive planning process that incorporates state-of-the-art technical expertise in legal strategies and financial products with the human element. Aside from outstanding technical expertise, wealth planners adhere to seven core principles.
These seven principles work together and should be treated as prerequisites in any situation. The competency exhibited by all wealth planners is fundamentally directly related to their fluency with and execution of these core principles.
Flexible: Wealth planning can change and adapt to your evolving circumstances or the shifting financial and legal environments. Successful wealth planners are flexible, accommodating, well-informed, and capable of quickly identifying and analyzing the range of anticipated scenarios.
Discreet: A high degree of discretion is a requirement for any professional working with the wealthy. As it relates to wealth planning, discretion regarding specific legal strategies or financial products can help avoid unwanted attention and unnecessary levels of questioning, and retroactive changes to rules. Prudence should also be used with the nature and details of the interpersonal relationship between you and your wealth planner.
Transparent: In many situations, neither you nor the wealth planner will benefit from sharing the intricacies of a sophisticated or customized legal financial solution. Nonetheless, each solution needs to be as transparent as possible and available for scrutiny by appropriate authorities. Moreover, operational transparency is a necessity.
Cohesive: While the legal strategies and financial products of wealth planning can be employed on a standalone basis, shared philosophy and a certain degree of integration should inform all wealth planning. This will help ensure that your goals and objectives remain the focus of all efforts and allow legal strategies and financial products to work in more than one capacity, if possible.
Risk sensitive: The spectrum of wealth planning solutions spans from plain vanilla to the truly exotic. Without stepping over any legal boundaries, there is still ample room to be creative. It is therefore critical that you and your other trusted advisors understand the level of assertiveness associated with a particular solution and consider it in the context of your capacity for risk.
Cost-effective: There are times when being on the cutting edge carries too high a price tag for the result. Other times, more mainstream solutions are sufficient. Your wealth planner will work with you to balance the benefits of a recommended course of action with both its financial and psychological costs.
Legitimate: Wealth planning should never incorporate tools or techniques that are—or may be perceived to be—illegal or unethical. Considering how much can be accomplished by operating squarely within the law, Is simply greed, ego, or sheer stupidity that leads the wealthy and some of their advisors to cross the line.
These seven principles work together and should be treated as prerequisites in any situation. The competency exhibited by all wealth planners is fundamentally directly related to their fluency with and execution of these core principles.
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.