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How To Evaluate The Best Wealth Structuring Advisor For You


(This article was originally published in Forbes by Jimmy Sexton. Link to the article here.) 

Technology has revolutionized the creation of wealth and enhanced upward mobility. Flip on the TV or browse the business section of the book store and you will find countless “overnight success stories.” Millionaires walk the streets of every city. This new crop of ultra-high-net-worth individuals (UHNWIs) are making several important decisions for the first time.

The average age of UHNWIs is dropping and their attitudes about wealth are noticeably different than their older counterparts. UHNWIs rightfully enjoy the perks that wealth brings. With an eye to the future, savvy UHWNIs are also seeking to protect their assets through wealth structuring.

I’ve helped several UNHWIs overhaul their lives to achieve more security and freedom. Wealth structuring creates a platform through which UHNWIs can grow, preserve and protect their wealth and pass it to their heirs in a tax-efficient manner in accordance with their wishes. Wealth structuring brings together tax planning, wealth protection, estate planning, succession planning and family governance.

In my experience, most UHWNIs are business owners. Few have inherited their wealth. In fact, 70% of wealthy families lose their fortune by the second generation – 90% lose it by the third. Business owners are quick to hire lawyers and accountants for their businesses but tend to neglect their personal affairs.

Many UHNWIs are, understandably, oblivious to their risk exposures – they often don’t consider their vulnerabilities until they’ve been attacked. Why work so hard only to have someone swoop in and take it all? That’s why selecting an advisor who is capable of designing a bespoke wealth structure is a wise move. The advisor’s familiarity with your affairs can help you decide when it’s appropriate to begin wealth structuring.

Picking an advisor is a massively important decision that should not be made in haste. Those currently without the right advisor are in a tough spot as there are no hard and fast rules regarding the right time to begin wealth structuring. However, here are some questions to consider: Does your business have a seven-figure revenue streams Do you have significant assets? Is your business and life international?

After asking these questions and determining if it’s the time to begin wealth structuring, UHNWIs can avoid the stress and negative outcomes caused by ineffective wealth structures by selecting advisors with these four key attributes:

1. Value

Wealth structuring will overhaul your life, but it isn’t cheap. It’s imperative to select an advisor who is willing to put the time and effort into getting to know you, your family and your business(es). It’s the personal details that can make the difference between a mediocre wealth structure and a great one. Advisors should use a client’s lifestyle, preferences, goals and fears to customize the structure.

As a successful business owner, you’ve learned how to read people. Lean on your experience. If a prospective advisor isn’t trying to understand your personal life, family and end game during the first meeting, you can safely move on to the next one.

Don’t automatically assume that your structure is optimized because of its price tag or the name of its designer. Many larger firms aren’t structured for senior partners to deliver intensely personal services. Look for firms that have the flexibility to structure their fees so that the most senior advisors are heavily involved in every step of the creation and implementation of a structure.

2. Global Perspective

Advisors with a global perspective can maximize the benefits brought by wealth structuring. Many advisors become experts in just one jurisdiction – the one in which they live and work. Every client that walks through the door is funneled into the handful of structures available therein.

If an advisor gives you a brochure featuring a certain jurisdiction and/or entity, then you can safely continue your search. Never accept any prepackaged structures or solutions. As well, ask how the advisor conducts research about the leading and emerging jurisdictions. A stumbling response likely indicates that the advisor crams every client into preselected jurisdictions.

Single-jurisdiction specialists might offer multijurisdiction plans but typically produce weakened and compromised structures by making their home jurisdiction the plan’s backbone. Advisors with a global perspective evaluate all relevant jurisdictions and select the right ones for a structure based on the needs of their clients.

3. Clarity

Legal systems are complex but the explanation of your structure shouldn’t be. Unfortunately, many firms make things sound extra complicated to justify their fees. You don’t want a song and dance. You don’t want to be “dazzled” by jargon-filled presentations. You just want a structure that works and that you can understand.

The true sign of mastery is an advisor who can take a complicated subject and break it down so that anyone can understand it. Be sure your potential advisor can help you understand how the structure would function in the real world and any necessary precautions that need to be taken to allow for flexibility in the future.

A desirable advisor should be able to describe a proposed structure in just one to three pages. Watch out for 30-plus page binders full of information irrelevant to your structure. Beware of buzzwords like “synergy” and “multilateral.”

4. Innovativeness

Creating a structure that provides benefits such as tax reduction, investment freedom, privacy and security is one thing. Creating a structure that maximizes these benefits while maintaining flexibility is something else entirely.

We live in a dynamic world. Circumstances and preferences can change quickly. Innovation and creativity are required to allow flexibility without compromising the current benefits of a structure. Making changes to a structure that was designed without flexibility often triggers tax liabilities that could have otherwise been avoided.

Having the ability to make changes as needed to maximize benefits while staying in legal compliance is tremendously advantageous. In my experience, the benchmark for true innovation is advisors who lobby governments to create or change laws for the benefit of their clients.

Innovative advisors test boundaries. Ask a prospective advisor if an outside third party has ever rejected one of their proposed structures when double-checking its legality. The ideal answer is “yes.”