Boston MFO had the pleasure of hosting a roundtable discussion with thirteen experienced wealth management and structuring advisors, spanning three generations. Each bringing a unique perspective on meeting families’ evolving needs, leading to a thought-provoking discussion. Key themes emerged around structuring, intent, governance, and forward-thinking succession planning.
We posed the question:
“Is the process we follow to structure our clients’ wealth
still relevant to the client and to the purpose the family want to achieve”?
The discussion exemplified how advisors, at times, may rely heavily on established methods, raising concerns about whether these practices truly serve the family wealth’s best interests. This gathering also yielded valuable insights into our roles and highlighted ways to enhance the quality of our client service.
Key thoughts from the discussion:
Who is our client
This was a very engaging point. A trust is created to provide for future generations. Our focus is on working with the “Wealth Creator,” our client, to ensure we design a structure that solves the short comings and fears they have.
Within the role of a wealth advisor, processes are designed and driven by the current needs of the wealth creator, who ensures that measures are put in place to facilitate their version of the future.
This raised the question: “Should we consider amending our consultation processes? With the guidance and support of the Wealth Creator, as well as consulting future generations to understand their needs?” This approach would not only strengthen the wealth structure to support the next 90 years but also address existing shortcomings.
Process habits
After decades of assisting clients, our processes may have become a function of habit and may detract us from being creative, thorough and solution driven. This discussion revealed a contrast between generations: younger advisors showed an openness to exploring innovative ideas and techniques. This insight raised a valuable question- would a fresh approach bring new ideas and solutions, enhancing outcomes for clients?
Intent
As professionals, we always monitor our cost, and to ensure we are cost effective, we do not always spend as much time as we should with the Wealth Creator. Does this lead to a less defined understanding of the true intent behind the new wealth structure? The question is still, who is our client – the person paying our bills or the people who will benefit from the structure? Does the fear that our cost will drive clients away prevent us from designing a structure that will fulfil the needs of the future generations?
These questions also led to follow-up discussions about current regulatory requirements and whether they compel us to rethink our approach and systems. As companies providing financial services- particularly in trusts- we are obligated to know our clients and adhere to these requirements. Should we not, then, probe further and ask questions of the wealth creator to fully understand their intent?
Understanding the purpose behind the structure is the most important responsibility of the advisor. Without clarity on the intent, how can we draft trust documents that ensure the purpose is fulfilled? It is essential not only to understand the Wealth Creator’s current situation but also to anticipate the future needs of upcoming generations.
Governance
Strong governance is an essential part in ensuring the effective execution of the wealth succession plan. A service provider that has a high standard of governance in the operations of the structures will ensure that the intent behind the structures is achieved. It is important to note that appropriate governance processes should be an integral part of any advisor’s personal approach to finding solutions. The governance processes should create a safe space in which the advisor can advise from. This safe space creates a flexibility in approach without compromising on creativity, integrity, and the quest for fresh solutions.
Industry succession
In terms of industry succession, are we ensuring that our firms have a solid succession plan in place? Are we cultivating the next generation of advisors to learn, absorb knowledge, and gain experience from the current generation of wealth advisors?
If we are designing a succession plan for our clients’ wealth, shouldn’t we also ensure that our firms are well-positioned to advise future generations as they fulfil the intent or purpose behind these wealth structures?
In conclusion, advisors should approach the wealth structure they propose wholistically. The technical aspects involved within the wealth structure should be addressed by taking into consideration the “softer” issues surrounding the client and their family. Further to this, more time and effort should be allowed to interrogate the intention of the wealth creator, and these findings should be documented. To be truly sustainable, the proposed structure must provide effectively for the needs of the future generations, rather than finding a solution solely for the current situation, the wealth creator finds themselves in.