The largest transfer of wealth in history presents
monumental threats to those we love.
Blessed with strong women in my life, both personally and professionally, a special place resides in my heart for a careful and trustworthy approach to wealth management. I vividly recall sitting at the breakfast table as a child caught staring at my mother’s tired expression. A single mother, she had just completed another 12 hour nursing shift after studying for night school. That moment fired up passions of advocacy as I increasingly realized, at a very young age, that most investors, women and seniors in particular, need a trusted advocate when dealing with the stock market and financial concerns. Now, several decades past this career epiphany, my daily existence is supported, organized and occasionally scrutinized (pardon me…gently corrected) by my spouse and the strong women in my life.
Statistics infer that daughters, mothers and sisters will inherit at least $30 trillion in assets over the next four decades. Studies also show that the financial services industry fails to serve their needs. Will you leave a clear, concise and manageable plan for the financial security of your loved ones? Everyone knows Uncle Sam lurks and looks for his share at that precious estate opportunity—so proper planning goes without saying. The Fiscal Cliff, budget deficits, fairness of markets and higher costs are big threats likely to impact your family, too—just not the biggest. You certainly cannot control threats like Iran, terrorism and political gridlock. Still, the monumental threats to your daughters, mothers and sisters arise when trusted advisory relationships are not established well prior to your scheduled ascension (?). An emotional time; a time of extreme vulnerability; the world on her shoulders…even the strong need the support of an integrated team of legal, tax and wealth management professionals who will listen and deliver wisdom for years to come. Strong Men, this legacy of support is under your control!
Now two decades into my professional career as an advocate for families, I have cringed at each story told by women taken advantage by unsuitable investments, outright fraudulent practices and schemes or just plain inferior advice. In some cases, advisors, and I use the term loosely, just do not possess the skills, resources or humility to deliver on their advertisement. Often self-centered in motivation, it is just as harmful to have advisory relationships with those who put their financial or leisure decisions ahead of those they are paid and entrusted to serve. Strong Men (and Women too), listen up! As with taxes, I can write with certainty that you need to prepare and protect your loved ones from these potential threats.
Please consider the following as you look to solidify or establish these critical advisory relationships. The fiduciary* promises of customized wealth management must include trust, service and value. The TRUST you establish with an advisor is paramount to a long-term relationship. An exceptional level of SERVICE must be given in good and bad markets with anticipation of your family’s unique needs. Communication should be frequent and information should be shared in a clear and manageable fashion. Any VALUE proposition must deliver unbiased investment advice and financial strategies offered at a pricing structure which avoids conflicts of interest. Every detail that causes concerns over a potential advisor’s commitment to these promises should be satisfactorily addressed. In summary, is the advisor always willing to advocate for your family’s unique priorities?
With the spirit of Paul Harvey in mind, there is much more to this story. Whether you independently manage investment and financial affairs or have an existing brokerage or banking relationship, the below three links are worth further exploration as you solidify in your own mind that you have done all you can to protect those Strong Women you love.
*What Does It Mean to Be a Fiduciary?
Investment Advisors are governed by the Investment Advisers Act of 1940 and applicable state securities laws, which govern conduct and disclosure requirements, creating a high legal standard referred to as “fiduciary” duty. Your advisor becomes a fiduciary once you have entered into a written advisory agreement that explicitly acknowledges an advisory relationship and obligations to you.
As a fiduciary, your investment advisor has the duty to:
- Put the client’s interest first.
- Act with due care and in utmost good faith.
- Act with prudence; that is, with the skill, care, diligence and good judgment of a professional.
- Ensure that investment advice is suitable to the client’s objectives, needs and circumstances.
- Not mislead clients.
- Make full and fair disclosure of all material facts.
- Avoid conflicts of interest.
- Fully disclose and fairly manage, in the client’s favor, any unavoidable conflicts.
- Be loyal to clients.
An advisor will be measured against a higher standard of conduct than a stock broker.
Michael D. Hakerem, CFA is a powerful advocate for families and has a passion for integrated private wealth management and the promotion of finance for the greater good of families and society.