Protecting the economic engine of your family: Wealth management

By Chris Yount
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As family businesses grow, so does family wealth. Eventually, that capital will transition from being a byproduct of your business into a business all its own.

The most crucial step in being a good steward of that money is picking the right wealth management company to assist in protecting, managing and growing those assets. Here are some points to consider as you embark on finding an advisory firm that will suit your specific needs.

First, start with an understanding of what you need. Some firms strictly offer financial advice/management while others provide full-service family office functions. These services can include travel arrangements, payroll for household employees, coordination of lawyers with accountants, bill paying, scheduling maintenance for a vacation home and even procurement of concert tickets. Some firms can act as independent trustees while others lack that legal authority.

Come to an understanding with your family members as to which services are needed and which are not. Some of these functions might be currently handled by company employees. Is that the long-term goal, or are you looking to separate the business from the day-to-day requests of family members?

My second primary consideration would be the typical client size that a firm handles. You will find that most wealth management firms operate in a given range of assets. I would not want to be the adviser’s largest client, as I would have concerns that they lack the sophistication my account requires. Similarly, I would not want to be the smallest client and receive little attention from senior management. A good goal is to be in the 50th to 75th percentile of the firm’s client roster — the Goldilocks zone of not too large but not too small.

Related to client size, I recommend asking about the company’s investment philosophies. Does the firm have a menu of standard investment strategies to choose from, or does it take a more tailored approach to your goals? Can it accommodate different family members investing in different products, or does it insist on managing a uniform account? Make sure the approach lines up with your needs and the level of involvement you foresee.

It might be obvious to some, but a key consideration should be location. Where is the adviser located? How will family meetings be handled? Does the firm have branch offices in the cities where other family members live? Making sure all family members have easy access to the advisory team helps to keep them from feeling excluded.

Ask questions about the firm’s security protocols. I know a disturbing number of wealthy individuals who have fallen prey to hacks, identity theft and confidence scams. Just this year, Shark Tank star Barbara Corcoran lost almost $400,000 in an email phishing scam. How will your financial advisory firm help protect you and your family from losing your hard-earned money? Look into two-factor authentication, account access protocols and file backup procedures.

My last suggestion is to get as many referrals as you can. Every potential adviser will tell you that they are amazing. They will produce slide decks and spreadsheets that show their impeccable performance, and they will boast of the clients who have happily stayed with them for 30 years or more. The truth of these claims will be more evident by speaking with their actual clients. Lean on your business and social network to find referrals not given to you by the firm. This way, you can ensure you are hearing the uncoached true feelings of their clients.

We are accustomed to thinking of our family business as the economic engine that drives our family wealth. Over time, begin to reframe your thinking about that prosperity as its own mechanism for building wealth. Dedicate the same level of time and attention to it as you would your business, and you will be richly rewarded.

Chris Yount led his third-generation family business to new heights before selling the company in 2018. He now shares his wealth of experiences by serving as a board adviser, angel investor and author (www.ChristopherYount.com).

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