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Closing the Gap in High Net Worth Financial Planning and Wealth Management

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There’s a pervasive gap in high net worth financial planning and wealth management between what clients expect and what they receive – and that gap can be closed with Team of Experts Planning. 

What Is the Client Underservice Gap? 

For example, 80% of wealthy investors recently surveyed expected to receive advice on business succession planning from their financial advisors, but only 1% actually received it. Consider this “expected-vs.-received” gap and similar gaps found for some other financial planning and wealth management services: 

  • business succession planning:                         80%-vs.-  1%
  • non-liquid asset management:                         87%-vs.-  5% 
  • tax planning advice:                                         92%-vs.-25% 
  • Trust services:                                                  94%-vs.-10% 
  • real estate advice:                                            76%-vs.-  3%
  • wealth transfer advice (while still alive):        96%-vs.-24% 
  • loan and credit management:                          83%-vs.-  3%

Why Does the Client Underservice Gap Exist, and How Can You Avoid It?

Consider first that most financial planning, wealth management, and advising comes down to 3 areas: 

  • growing money, 
  • keeping money in the face of taxation, and 
  • leaving money for loved ones and philanthropy. 

Financial advisors often aren’t trained to get too deeply into tax planning. Their financial planning and wealth management training focuses on personal finances, and they tend to concentrate heavily on investing, that is, on growing money – through marketable securities like stocks and bonds and exchange-traded funds, and maybe alternative investments. It’s what they know, and it requires time to build and maintain that expertise. 

But that bias to go deeper and deeper into investing topics comes as a trade-off, especially for the high net worth. It comes at the cost of time and effort which might be better allocated to specialized planning.

When wealth reaches a certain point, preventing its depletion by heavy taxation becomes a significant financial planning and wealth management priority. It needs focused attention alongside investment returns.

1Spectrem Group; https://advisorpedia.com/research/expectations-investors-and-advisors-have-differ/, July 29, 2021

CPAs, whose focus is on the tax code, where many financial planning and wealth management strategies are possible, would seem to be the answer, and they absolutely should be. But they have a different problem.

CPAs often have a time problem, and that’s a leadership problem. Even top CPAs work exceptionally long hours doing all the necessary tax filings, reviews, and financial reports for all their clients. Often, they lack the time to perform proactive research and planning. High net worth clients, including successful business owners, end up underserved here as well.

Successful business owners and high net worth families have all kinds of unique combinations of issues, challenges, and aspirations. These can include:

  • increasing tax liabilities and skyrocketing marginal tax rates
  • key-employee compensation and retention 
  • succession planning and related tax mitigation 
  • charitable tax planning and philanthropy 
  • integrated estate planning and retirement planning 
  • complexity and risk planning – for example for special-needs family members, blended families, the uninsurability of a spouse, etc.
  • much higher potential returns on capital within a successful business than in marketable securities or alternative investments
  • risk management as a business profit center.

The list makes clear that real financial planning and wealth management solutions require many different kinds of expertise.

Tax expertise alone spans many complicated niches: American tax law, including statutes, case law, and regulations runs to tens of thousands of pages. And it’s changing constantly. Financial advisors and CPAs are hard-pressed to master all of it.

Business owners and the wealthy may rely on a number of advisors and experts, but many of these specialists work directly with the business owner alone, without collaboration or insight from the other advisors. This hub and spokes arrangement, where the client is obliged to be the hub, makes comprehensive financial planning and wealth management a challenge.  It leaves a lot resting on the client’s shoulders, a client who often is already pressed for time.

Consequently, the cross-expert teamwork that advanced planning requires frequently doesn’t happen. The same is true for high net worth families. When you look across the breadth of significant financial planning and wealth management issues, the gaps between what is needed and what is delivered are pervasive.

Gaps happen because expertise is dispersed and siloed.

Team of Experts Planning

Team of Experts Planning is a financial planning and wealth management strategy designed to close those gaps.

The Team of Experts Planning process is led by a trusted advisor. Here is a summary of the process illustrated with 3 hypothetical but realistic case studies

If you’re interested in learning more, our guide - 6 Principles High Net-Worth Families Should Know - is FREE! Please click here.