Before even asking questions about what wealth managers do and where to find one, most people will want to know if wealth management is even relevant for their business. Below are common questions, and answers, about wealth managers.
DO YOU NEED ONE?
You don’t have to have to be a Rockefeller to secure the services of a wealth manager. Any business owner who is about to have a “liquidity event” should seriously consider retaining a wealth manager.
WHAT DO THEY DO?
Wealth management is a high-touch, high-service approach to managing all things financial. A wealth advisor works with a team of experts on banking and insurance, works with a client’s attorney on issues such as power of attorney and wills, manages the client’s investments. In an a la carte approach, what ends up happening is that the left hand doesn’t talk to the right hand. The concept of a wealth manager is to have one person manage the team. Wealth management can even include a ‘family office’ where the wealth manager takes care of all the client’s financial problems or situations, perhaps obtaining mortgages or loans for them and paying bills. So even though you probably work with a financial professional, you just might be short-changing yourself if you haven’t investigated working with a wealth manager.
WEALTH MANAGEMENT ISN’T JUST ABOUT RETIREMENT
With the sale of your business, your focus shifts. The focus of wealth management is also shifting from the accumulation of assets to the distribution of assets. Things to consider are how to pass your assets on to the next generation. Do you want them to inherit all at once or over a period of time? If you have a child with special needs, how will you protect the assets of that child? Should you set up a charitable trust? Remember, you are not just protecting your assets for yourself and perhaps a spouse, but also for your children and even for future generations, or charities.
WHY YOU SHOULD START LOOKING NOW
The biggest mistake is that families and business owners wait too long before they start the process. Once you already have a successful business or you’ve sold a business, many strategies that would have been available to you are no longer available, or they are not as effective. Say you have two children who are working in the business, for example, and you want to start giving them a quarter of the business in stock. Giving a quarter of the business when it is worth $2 million can be done without paying any gift tax, but giving them a quarter of the business when it is worth $10 million cannot be done without paying gift tax.
QUESTIONS TO ASK A WEALTH MANAGER
Services Do they offer comprehensive services? Is it all in-house? Do they have strategic partnerships with other folks? How do they work with the client’s accountant or the client’s attorney? What do they do about coordinating banking services? You should feel that the advisor could actually advise you personally on several of those different issues or have a team of experts available to do that. Also look at how the routine reports and information is presented, to make sure it fits your preferences. Competence You also want to look at an advisor’s designations–Certified Financial Planner, Chartered Financial Analyst, Certified Public Account–and the experience and skill sets of the others on the team. Fees There is no industry standard regarding compensation, regarding the amount charged as well as how fees are structured. Fees can be based as a percent of assets managed, by the hour, by the year, and so forth. As in most purchase decisions, price is usually not the primary determining factor.