An intriguing compilation of essays on what the wealthy want to know about managing their money and their legacies, Wealth of Wisdom: The Top 50 Questions Wealthy Families Ask, edited by Tom McCullough and Keith Whitaker, provides financial advisors valuable insights into HNW clients’ needs, responsibilities and uncertainties.
McCullough is chairman and CEO of Northwood Family Office in Toronto, and Whitaker is president of Wise Counsel Research, a think tank/consultancy based in the Boston area focused on families with significant wealth.
The book’s contributors are family office advisors, entrepreneurs, authors, professors, estate lawyers, investment officers for public employee pension funds, mentors, inheritors and managing director of the IMF.
HNW clients told the various authors that they want sound advice about how to handle their portfolios as they are living longer and are faced with pressure to create values-driven investments.
“This reality adds increased pressure for families to foster meaningful conversations about difficult issues all families must grapple with,’’ writes Dirk Junge, chairman, the Pitcairn Company.
Of immediate interest to FAs, and the place where all clients must start is how do you find a good financial advisor?
McCullough and Whitaker suggest clients look for a person of “integrity, a good demeanor, the right fit with you, the best skills, and the appropriate incentives and motivations.’’
Susan Massenzio, of Wise Counsel Research Associates, suggests a prospective client ask a potential advisor what specific services they will receive, who will work with the family and in what capacity, and how does the advisor differ from others? She says that clients need to be persuaded that you stand out among the crowd, and that important as chemistry is, competence is more important.
“Families may come to enjoy personal rapport and closeness with their advisors but the foundation of any rapport must be tangible services from the advisor to the client. Most of these services take expertise and time to provide.’’
There are eyebrow-raising comments from Philip Marcovici, a retired lawyer and author of The Destructive Power of Family Wealth: A Guide to Succession Planning, Asset Protection, Taxation and Wealth Management. He warns the wealthy to “manage their advisors in the right way. Letting an advisor “kidnap’’ the succession process is very dangerous and all too common. There are many situations of advisors becoming the gatekeepers to the family’s wealth, using wealth that is not theirs to benefit themselves.’’
In their essay, “How Can You Avoid the Next Bernie Madoff?’’ Stephen Horan and Robert Dannhauser assure wealthy clients that scrutinizing a potential FA’s background and track record will never offend the competent advisor with high standards.
Thayer Willis, an author and member of the founding family of Georgia-Pacific Corporation, says HNW clients want direction on how to craft their legacy and they often say passing on their values is as important as leaving substantial financial capital.
“Your legacy is the character, qualities and deeds that people remember; it is not an estate plan. You can manage your legacy by making your estate plan support it and reflect it,’’ she writes.
Scott Hayman of Northwood Family Office, says even the wealthy question the value of a financial plan.
He explains why planning is essential. Meir Statman, a professor of finance, addresses the issue of wealthy clients needing guidance on balancing saving, and spending in retirement; and Charles Collier, a philanthropic advisor and author of Wealth in Families, says clients need help in starting the family conversation about financial inheritance, and prenuptial agreements.
Jamie Forbes, founder of Forbes Legacy Advisors, says the wealthy grapple with how to preserve the family vacation home or estate, and Patricia Annino, a lawyer who specializes in taxation and estate planning, says clients seek guidance in preparing for longevity and mental incapacity among family members.
Other contributors answer HNW clients questions about how to make sure a portfolio meets goals; how to decide on asset allocation; how to understand and deal with investment risk; two takes on whether active management is worthwhile; how to avoid the negative effect of giving money to family members, and how much money should one leave to children, and when.
The essays on giving well answer clients’ questions on the difference between charity, philanthropy, strategic philanthropy and impact investing, how to encourage generosity among family members, and how to get your children and grandchildren involved in philanthropy.
Wealth of Wisdom. The Top 50 Questions Wealthy Families Ask, edited by Tom McCullough and Keith Whitaker. Wiley & Sons. 373 pages. $40.
Eleanor O’Sullivan is an award-winning journalist who writes for Financial Advisor.
What The Wealthy Want To Know About Managing Their Money And Legacies
April 4, 2019
« Previous Article
| Next Article »
Login in order to post a comment