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| Best Practices: Financial Advisors |
Finding the Perfect Fit
Sara Hamilton
12/01/2004
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When her husband died suddenly, Linda Loehr was left with the responsibility
of finding a trust company that could handle not only investment oversight, but
also the fiduciary responsibilities for the trust that owned the small,
privately held company he founded. To develop a shortlist of candidates, Loehr
relied heavily on her attorney’s assistance. After a series of in-person
interviews with three firms, the one that impressed her most was Whittier
Trust.
“Whittier really seemed to appreciate the situation I was in. I needed
a well-qualified corporate trustee that would take a strong hand,” she explains.
“They offered good suggestions during those interviews—ones I hadn’t heard
before—which we implemented downstream and have proved beneficial. I was
impressed with their expertise.”
| The significant investment in time, effort and money required to conduct
the search made it clear to the family that whatever decision they
made should be a lasting one. |
Whittier’s ability to get started
right away, the personal touch of the relationship managers and their excellent
communication continued to impress Loehr during the transition. “They handled
everything. All I had to do was sign papers,” she says. “They were constantly in
touch with me to let me know what was being transferred, and they were available
to me all the time for any questions I had or to address situations I felt
needed further follow-up.” One of the relationship managers also took a seat on
the company’s board immediately and helped facilitate its sale.
Families of
significant wealth typically require coordinated servicing to address issues
such as family continuity, family philanthropy, lifestyle management, investment
planning and management, integrated tax and financial planning, and estate
planning and trusteeship. They also need assistance managing the risk and
liability exposure that spans these areas. Interdisciplinary strategic advice
and financial information for better decision making are essential and are two
hallmarks of a true wealth management offering.
 As firms professing to offer
services for private clients proliferate, the term “wealth management” is used
more and more loosely. As a result, it becomes increasingly difficult to
differentiate between types of providers, not to mention companies with similar
business models. A true wealth management firm can provide coordinated,
interdisciplinary expertise in an integrated fashion or is able to provide
access to those services by outsourcing to other providers on the family’s
behalf.
Unearthing the difference among providers and sensing the approach
and culture that most closely match the goals of the family is a challenge.
After 15 years of working with affluent families, I have learned that experience
is one of the best teachers. So, I have asked five families to share the
criteria and due diligence process they used to select a wealth advisor.
Searching for a Quarterback
When the Hobart family sold its 79-year-old
manufacturing business to ITW in 1996, 60 percent of the proceeds was
distributed to individuals in 23 households spanning two generations, and 40
percent was retained in two trusts. Initially, they set up a virtual family
office to manage those trusts, as well as some household assets. The Hobarts
engaged a custodian, worked with an advisor for asset allocation and manager
selection and assigned more tasks to the family’s law firm, but had no dedicated
staff nor central location. The trustees held quarterly meetings, and the
advisors offered some education sessions to family members. Over the next seven
years, however, service gaps became noticeable and the family realized that what
was missing was a full-time quarterback—someone to coordinate all the components
and take responsibility for overseeing the integrated whole.
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