Lisa Gray

ContactLisa Gray has been a wealth writer since 2001. She has been involved in the wealth management industry since 1988. She is the author of two bestselling books—The New Family Office and Generational Wealth Management.
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graymatter Strategies LLC

A Revolution Is Under Way: Don't Let It Pass You By edit
Monday, March 12, 2012 09:00

Tags: asset management | client loyalty | plan execution | teams

Anyone who has witnessed the unraveling of a family after a relative has died and the will has been read can tell you that wealth management is not all about the money. With $41 trillion already migrating to the next generation, advisors increasingly have to deal with family issues around money. Yet the advisory industry has kept these two sides of wealth management separate and apart. Until now. A revolution is going on. The evidence is out there. By the time you see it showing up in industry news articles, you know you’re already behind the curve.

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Teams in the advisory world are nothing new. There are teams within large financial institutions who create a sub-identity within the firm. There are teams who come together at big firms who subsequently break off and form their own advisory group. There are other teams formed within separate legal entities whose purpose is to serve the wealthy at bespoke levels of customization. These are called family offices.
 
Family offices often employ experts who help families manage the psychological aspects of wealth. They hope to foster better communication among family members for purposes of succession and carrying on a legacy as well as creating an effective estate plan. The need for this type of expert in working with clients outside of a family office is now being recognized.
 
Companies have been formed and books have been written about the psychology of money. Yet estate planners, financial advisors, and tax planners are not accustomed to including these professionals as regular members of a client’s advisory team. The growing presence of these experts at advisory tables is a revolution whose time has come. Although families and advisors alike have cognitively been aware of these issues, proactively including their management in the overall management scenario is an historic development. This formally recognizes the integral role that emotions and family dynamics occupy in estate planning, investment management, and tax planning.
 
It also gives credence to the fact that wealthier clients expect their advisors to be a resource for them—and not just to help them find a good nanny or a good plumber. An advisory team no longer has to be limited within the confines of an advisory firm. If advisors do not wish to increase fees to cover the costs of an added service, they can outsource these services much more cost effectively for clients who desire them. Clients can pay these experts directly or through a conglomerate tiered service offering.
 
Having a family dynamics expert or wealth psychologist as a permanent part of the team makes the advisor’s job easier. It helps advisors see which family members carry the most influence over wealth management decisions. And it makes the entire planning process run that much smoother. Providing such services becomes a more efficient way to do business. It creates client loyalty and an opportunity to get to know next generations. However the provision of such services is structured, including them as part of the wealth management process will become an imperative demarcation for advisors.

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