Play it safe - the 10 golden rules for wealth advisers
Georgina Stanley summarises the 10 golden rules for wealth advisers, as identified by delegates at Legal Week's recent Private Client Forum
December 07, 2011 at 07:03 PM
4 minute read
Georgina Stanley summarises the 10 golden rules for wealth advisers, as identified by delegates at Legal Week's recent Private Client Forum
With research from Barclays Wealth earlier this year showing that 40% of high-net-worth individuals had experienced conflict as a result of their wealth (with this figure rising to 47% for those with inherited wealth), the need for good advice on transitioning wealth and planning for the future is very apparent.
So, as compiled by delegates and presented by Barclays Wealth's Catherine Grum, Macfarlanes partner Edward Reed and Conyers Dill & Pearman director Alec Anderson at Legal Week's annual Private Client Forum held last month in Italy, here are the 10 golden rules they don't teach at law school for advising international families on succession planning.
10 – Be commercial; or, don't let the tax tail wag the dog
Think about the broader picture and make a decision that is based around your client's lifestyle. The advice has to be achievable for them and has to be delivered quickly, concisely and in a way that they understand. Fees can make or break relationships, so be transparent and ensure clients understand the value of what's being delivered. As Grum explains: "The temptation is to send over War And Peace, but people won't read that. Remember, you're dealing with individuals, so tailor your approach accordingly."
9 – Tread carefully with taboos
How do you advise a client on succession planning and transferring wealth to other family members if they refuse to accept the possibility of their own mortality? There are cultural issues around trigger points like death, divorce, religion and, of course, wealth itself, as some people find discussing money distasteful.
8 – Be objective and manage conflicts
In a family business things can often get muddled if, say, you're called on to advise different – and opposing – factions of the same family about an inheritance. Be cautious about giving your investment advice and keep track of what your role is.
7 – The world is getting smaller
Most high-net-worth advisers will have money spread around the world. But while some clients are aware of the legal issues caused by having a jet-setting lifestyle and an international family, others don't realise this can have a major impact on tax and succession planning.
From an adviser's perspective, a good international network of contacts becomes crucial in order to add real value to the relationship.
6 – Confront the difficult issues
Being able to identify conflicts and address them with sensitivity without becoming a yes man and saying only what the client wants to hear is imperative. Brushing things under the carpet and allowing a client to avoid the issue won't help.
5 – Work as a team with other advisers
Ultra-high-net-worth individuals could have up to 20 advisers: you need to spend time explaining the value of external advice and getting everyone to work together under a single leader. It's like baking a cake: it isn't as much about each individual ingredient, but about the magic of when they come together.
4 – Understand, but don't become part of, family dynamics
How far should you go before you end up part of the problem? Before you launch in with any advice, take the time to get to know the family.
3 – Ensure the client understands the situation
Make sure you understand the client and that they understand the advice. The better you know your client, the better you can understand their needs. Empathise and explain what they're signing in a way that doesn't make them feel stupid.
2 – Communication is a two-way street
Really listen and respond to what the client wants and not what you think you heard. Make sure communication is regular and as frequent or infrequent as your client wants.
1 – Plan for the future
Don't leave it too late. Whatever the difficulties, it's better to get everything agreed now rather than afterwards when there could be more conflict. From an adviser's perspective, make sure succession planning is flexible – clients won't thank you if they can't get out of something in five years if the law or family situation changes.
Catherine Grum, Edward Reed and Alec Anderson spoke on this topic at Legal Week's recent Private Client Forum, held in Italy in November.
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