Establishing Your Personal Board of Advisors
Wealth is almost invariably accompanied with complexity, which is why many affluent people consult with more than one advisor. You probably work with an attorney, accountant, and perhaps a banker, as well as your Lenox team. The question to ask yourself is whether these various advisors are making recommendations that work in concert with each other or at odds with one another. For example:
- You’re buying a house in another state where you plan to retire someday. In the meantime, you will spend the winter there and return to your original house for the rest of the year. Your financial planner has assured you that you can afford it. Your banker has provided you with financing. Your attorney has executed the closing. Your accountant, however, whom you only talk to at tax time, has been left out of the loop. As a result, you realize too late that you’re going to be liable for income tax in two states.
- You’re selling your successful business, but before you put it on the market, you convene your attorney, accountant, and business broker to determine what your company is worth and whether there are tax implications you should be aware of. What you neglected, though, is to include your financial planner to determine how much you will have to receive from your sale to live the lifestyle you hope to maintain for the rest of your life.
- You’re covered by a group disability insurance plan at work, but what you don’t know, unless somebody tells you, is that your plan will not cover bonuses, stock options, and other compensation beyond a portion of your salary.
In all these cases, problems arise from a lack of communication among advisors. By simply introducing them to each other and asking them to collaborate on your behalf, you might be able to avoid errors of omission and capture facts that might have otherwise been missed. We say “might” because even when advisors know each other, they don’t always collaborate unless somebody takes the lead. That’s why you need the right leader for these financial planning sessions.
Who should lead your advisory team?
Advisors like attorneys and accountants, as skilled as they may be, don’t always have knowledge of their clients’ overall finances, goals, circumstances, and challenges. Rather, they take a focused view of their clients’ lives, based on the disciplines in which they specialize. Moreover, many advisors tend to be reactive – they offer advice only when it is asked for.
Ideally, your advisory team should have a leader with a thorough understanding of:
- Your assets and liabilities
- Your tax situation
- Your unique objectives, apprehensions, and circumstances that may influence decisions
- Your values – in short, who you are as a person, as well as an investor
For many of our clients, Lenox fits that description because our comprehensive planning process provides us with a 360-degree view of your overall finances.
Whether you place Lenox in that role or not, however, it is important that you appoint someone who is qualified to assume these critical responsibilities. The right leader for your financial advisory can often determine when the recommendations of one advisor conflict with those of another. In addition, we have found that collaboration among advisors often helps identify gaps that might require specialized expertise – an elder care lawyer or investment banker, for instance. When appropriate, we are pleased to provide you with referrals to experienced professionals should you be uncertain whom to contact for assistance.
Who should be on your team?
The answer may seem obvious: Your attorney and accountant certainly and possibly your investment advisor, banker, and insurance professional. Different situations, however, often require different advisory acumen. Speciﬁcally, you should consider the following credentials when ﬁnalizing your choices:
- Your attorney may have worked with you in the past on real estate closings and other legal issues, but are they well versed in the intricacies of trusts and estate planning, business succession, or other complex disciplines? Depending on your situation, you may have to appoint two attorneys with specialized knowledge.
- Your accountant may be the same CPA who prepares your tax returns each year, but if you are planning your estate or perhaps transferring or selling a business, you and your heirs can incur a substantial tax liability. Choose an accountant with extensive experience in the areas relevant to your situation.
- Your banker may have provided you with a mortgage or other ﬁnancing, but if you’re a business owner who is contemplating an exit strategy, you are probably going to need an investment banker, business broker, and/or third-party business appraiser. These professionals will analyze your business and the competitive environment to arrive at a realistic valuation of your company. They can also add valuable input in structuring your transaction.
- Your insurance specialist should be able to help you identify sources of risk and solutions to mitigate that risk effectively. Again, depending on the complexity of your situation, you may require an additional specialist with speciﬁc experience and skills.
Finally, your Lenox team understands the total context of your overall ﬁnances and the connections between various aspects of your personal and professional life. As the quarterback of your advisory team, we can help your other advisors understand your priorities and make certain they are reﬂected in any strategies formulated on your behalf.
Lenox Advisors, Inc. (Lenox) is a wholly-owned subsidiary of NFP Corp. (NFP), a financial services holding company, New York, NY. Securities and investment advisory services offered through qualified registered representatives of MML Investors Services, LLC. Member SIPC. 90 Park Ave, 17th Floor, New York, NY 10016, 212.536.6000. Fee-based planning services are offered through Lenox Wealth Advisors, LLC (LWA), a registered investment adviser. Services will be referred by qualified representatives of MML Investors Services, LLC (MMLIS). LWA is a subsidiary of NFP and affiliated under common control with Lenox. Lenox, LWA, and NFP are not subsidiaries or affiliates of MMLIS or its affiliated companies CRN202304-281809