In early 2014, I wrote on the topic of change and the reasons we consider when we make one. As we begin 2016, filled with new goals and objectives, it’s important to review past decisions and how they turned out. What worked? What didn’t? What adjustments, if any, should have been made to ensure the stewardship and security of our wealth and well-being?
After advising families for several decades, I’ve noticed that most of them take inventory of what works and doesn’t work, but fall short on following through with the third step of determining if a change is even required, because change can be emotional, and difficult.
What are some indicators that it’s time to make a change?
First and foremost, any indication that confidentiality or security has been compromised or any impropriety has taken place for any reason is a clear sign of the need for change. In short, the relationship with your advisor needs to be fully reviewed. Any such compromise may lead to significant financial loss, reputational risk, business loss and threats to your and your family’s personal safety. Even small infractions may indicate larger issues lurking just out of sight.
A second consideration is the need to manage changes that result from the high (or low) points of your active lives and require a pivot in your financial-planning requirements. Life events, like marriage, children, an inheritance, a separation, divorce, illness or a family member’s death will also require additional expertise for which your current advisor may not be fully qualified.
Under such circumstances, your current advisor may suggest only partial solutions, or fewer options. He or she may also subcontract the planning or execution of some or all of the activities related to your new requirements to third-party providers. In those cases, the question of who is ultimately responsible for the advice and service you receive, or the problems that may occur, quickly becomes opaque and may lead to additional expenses and risk, or possible legal action and loss.
Another indicator that it may be time for a change is a recent or pending liquidity event. Such events may begin with a milestone business transaction, the sale of a business, a property transaction or legal settlement. The result may be such a significant cash windfall that your new needs for financial management exceed the capabilities of providers you have relied on for smaller levels of wealth.
Any indication that confidentiality or security has been compromised or any impropriety has taken place for any reason is a clear sign of the need for change.
Clearly, increasing levels of wealth are often accompanied by increasing levels of complexity, risk and the need to integrate financial management. Your goal, of course, is to optimally plan, manage and protect your wealth. So, any change in your wealth picture, or its complexity, should signal a review of your new requirements and current wealth management team.
In cases where professional expertise is required to meet your needs for investments, tax, estate planning, cash management and other services, a multi-family office may offer an alternative to your legacy providers. A multi-family office, acting as an advocate on your behalf, may also be a good source for an initial or periodic review of your accounts and their performance.
As difficult as the idea of changing an advisor may seem at first, there are reasons why such a change is exactly the right course of action. Remember, change should be viewed in a positive light. It allows one to make adjustments, corrections, modifications and revisions, and to recalibrate, if necessary. It’s forward thinking and necessary, if families want to ensure their wealth and well-being for both the short and long term.
Geller Family Office Services is an SEC registered investment advisor. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended and/or undertaken by GFOS), or any non-investment related services, will be profitable, equal any historical performance level(s), or prove successful. GFOS is not a law firm, and no portion of its services should be construed as legal advice. A copy of our written disclosure statement discussing our advisory services and fees is available on request. The scope of the services to be provided depends upon the terms of the engagement.
This article was originally published in the February/March 2016 issue of Worth.