This is Part 1 of a two-part series written by Justin Smith examining the importance for advisors to collaborate amongst industry peers and other planners to keep up with today’s information-rich consumer.
That number has left many planners unsettled. That is the percentage of adult deaths anticipated to result in a taxable estate under the post-American Taxpayer Relief Act (ATRA) tax environment.
The effects from ATRA are widespread, causing challenges for attorneys, CPAs, insurance agents and beyond. Many planners fear that upwards of 80% of their planning work may have dried up as a result of the changes embedded in ATRA.
This new environment is forcing change upon all, in some cases changing the advice we render and forcing planners to find new ways of sourcing clients.
To make matters more challenging, we now operate in a world where clients’ access to information and other advisors is unprecedented. The connected world has created more informed consumers who can directly research every planning topic on their own.
The Result? Today’s clients may feel their knowledge on planning topics is on par with the advisor based solely on their online research.
Navigating this challenge while not offending the potential client and demonstrating acumen is an increasingly more difficult thing to do.
the key to success is collaboration
Going forward, the key to success in any aspect of financial services is connecting with high-quality planners from all disciplines. Advisors should seek opportunities to develop relationships with planners of complementary skills and services, including those within their own specialty.
Those willing to invest their time and energy to this end will grow their practices and win clients. Circling the wagons out of fear of the deal-killing other guy or gal no longer works.
We have seen banks, family offices and large wealth management firms attempt to bring all of these services in-house into a proprietary team. This can be appealing to a client seeking a one-stop shop.
Independent advisors, who do not have experts from other disciplines working in their offices, should sit up and take notice.
Independents need to take this movement seriously and seek other like-minded independents to form collaborative teams. The best planning solutions evolve from the collaboration of multiple advisors working together to address every aspect of the client’s situation.
More than ever, It does not matter where an idea came from. It is, however, essential that the attorney, CPA, wealth manager, banker, insurance advisor or any others who partner in developing a plan identify and address each and every client concern and potential outcome.
decrease in advisor risk
The multidisciplinary team approach to planning also better manages so called “advisor risk”.
A united approach is likely to uncover differing ideas and opinions that can subsequently be analyzed and debated amongst the team, yielding a plan that the team has agreed upon. The lone-wolf planner exposes himself or herself to significant risk of making recommendations that may not be suitable or appropriate.
For example, a lone-wolf insurance advisor may suggest that a specific type of trust is setup to own insurance. Is the insurance professional equipped to make that recommendation? How about the non-insurance-licensed CPA or attorney who advises their clients buy only whole life?
These types of recommendations that marginalize other advisors can come back to haunt years later in the form of litigation and E&O claims.
Today, particularly post-ATRA, there are many nuances to planning, like domicile, basis, estate size, special needs, tax diversification, etc… There are also a myriad of asset-types that clients may own and in a wide variety of structures.
While the collaborative approach cannot remove all advisor risk, it certainly removes a significant portion.
The proper ownership, disposition, structure, accounting and diversification of these assets all require strategic planning across disciplines. Solutions offered by a planning team are much more attractive than the potential unintended consequences of planning done in isolation.
collaboration saves time for advisors
Another key benefit to the team approach that cannot be overlooked is time.
When advisors are focused only on their own expertise and not trying to do and be everything for their clients and prospects, they can be significantly more productive and profitable. Within a team approach, advisors can become highly focused on their specialty, which eliminates distractions and ultimately frees up time to focus on growing their business.
With multiple advisors spending more time marketing, the team can grow in a way that lone-wolf planning simply cannot match.
collaboration: a rising trend
Planning – whether estate, tax, insurance or financial – is a massive arena. There are more possible solutions, plans and combinations than anyone can possibly think of.
Comprehensive planning requires advisors of multiple disciplines collaborating to evaluate every aspect and nuance of the client’s situation and to produce solutions that can be implemented and managed effectively.
This trend will only continue to become more commonplace as the planning environment we all operate in continues to grow in complexity.
Advisors from all disciplines should seek out opportunities to create new connections with other planners. Whether it is simply exposure to new planning ideas or networking to find planners from other disciplines to collaborate with, participating in a strategic networking endeavor will be key to future success.
There are countless other advisors who need your specific skill set to complement their own. With the right team, you can grow your practice and conduct business securely and efficiently.
Planners who get ahead of the curve – those that embrace collaboration, hone their craft, share their expertise, market themselves effectively and network effectively – will grow their practices and beat the competition.