Lots of advisory firm owners pass the business on to a son,
daughter or other family member. That doesn’t always go smoothly. One big
mistake: Failing to make sure the new boss has the knowledge and experience to
really lead the business. To make sure a successor has the skills to succeed,
an owner needs to create a detailed development plan–and leave ‘parent role’ at
home.
MANAGING THE MONEY:
Trusts that use
multiple advisers. Traditionally, the directed trust model called for
electing a trustee and an investment adviser. Now, the wealthiest families are
slicing and dicing trustee duties into many different functions. Directed
trusts are showing up with as many as eight different roles, including a
“special assets advisor,” a “distribution advisor” and a “trust protector.”
Active fund
management’s future: ETFs. Despite the growing popularity of passive
index-based mutual and exchange-traded funds, active fund management still has
a future. It has to be different, low cost and transparent.
Benefits of tax-loss
harvesting are inflated. Some so-called robo-advisers may be
overstating the benefits of tax-loss harvesting. The claims made by online
advisors arguably represent the triumph of favorably simulated back-tested results
over actual experience.
THE PRACTICE:
A business sale
creates wealth, and unease. When a business owner cashes in and sells
an enterprise, it often brings some confusion–even unhappiness–along with new
wealth. To be of help in that situation, advisers may need to step outside
their own comfort zone and discuss non-financial issues with clients.
Clients know it all,
and want instant satisfaction. With the Web putting information at
everyone’s fingertips in an instant, advisers face a lot of know-it-all
clients. Many clients feel their Internet research makes them more
knowledgeable than the advisers. It is necessary to recognize this phenomenon
and try to set realistic expectations for our clients…regarding the process,
timing, potential complications, fees and likely results.
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