Posted on: June 25th, 2022
We believe one of the best things you can do when managing wealth is to be extremely clear on what you’re looking to accomplish and what hurdles stand—or could stand—in your way, and then develop a plan that reflects that full, deep understanding.
Why? Because we think you’ll agree that success—in investing, in business, in life—rarely happens by accident. When you’re clear-eyed about where you want to go and what could get in your way along the journey, you can both create a better map and build in better contingency plans.
The good news: There’s a process you can implement in your financial life that can help you to resolve your issues and arrive at your desired destination. We call it the Virtuous Cycle because it’s a multistep approach that continually reinforces itself over time to become increasingly positive.
Let’s take a closer look at the Virtuous Cycle.
Operationally, the Virtuous Cycle has six components (see Exhibit 1). That said, it’s also highly customizable, so think of it as a broad conceptual model for interpreting a plan and adapting it to your particular wants and needs.
The Virtuous Cycle
Important: It’s entirely possible that a financial advisor who uses this process doesn’t call it the Virtuous Cycle. The key, then, is not to pay too much attention to the name—but rather to look for a process with the following components.
with, of course—have a deep understanding of yourself and the people in your life who will be involved in, or impacted by, your planning decisions. Without the ability to get at these insights, all the specialized financial expertise in the world or the most advanced solutions are of little use. It’s a lot like a doctor treating a patient’s illness: If the diagnosis is incorrect, the treatment is not likely to be effective in healing the disease.
That deep understanding has to include your financial situation and goals, of course, but also needs to go well beyond that information. Based on our extensive research on the rich and Super Rich and on the best practices of leading trusted advisors, we see that the best approach to gaining that deep understanding is through what we call a Total Client Model process. This approach is highly effective because it systematically uncovers your latent needs—that is, needs that you have but may not be aware of yet.
This Total Client Model (see Exhibit 2) is designed to address seven key areas of your life.
The Total Client Model
By using this Total Client Model, you and your advisors can develop an extremely detailed and expansive understanding of you and your world. That information, in turn, allows your advisors to work effectively with a professional network of experts.
No one—not even the very best financial professional out there—is expert enough in all areas of managing wealth to deliver the highest-quality advice in all areas to highly successful, wealthy investors. Indeed, the best advisors realize that fact and therefore create and maintain strong networks of other expert professionals to turn to when necessary.
The very best of these professional support networks have four characteristics:
With profiles created and the ability to tap the expertise of a professional network in place, advisors can then engage in scenario thinking with you. Simply put, this is a method of generating alternative futures—it’s the point where all the “what if” questions are asked and answered.
Wealth planners can address these and other “what if” questions. Actually, there are a number of different ways to deal with each of these matters. From the meaningful possible outcomes devised in this phase, the most viable course or courses of action are selected and discussed with the client and other trusted advisors and experts.
At this point in the process, you’re looking for a wealth manager to communicate the various scenarios and recommendations to you in a way that makes a great deal of sense. Depending on the complexity of your situation, this might be very straightforward or quite complicated. What’s essential is that you understand—in broad stokes or in excruciating detail, depending on your preference—how the recommended solutions can enable you to achieve your agenda, and any limitations of those solutions.
Framing the recommendations is a well-developed skill among elite wealth planners. It demonstrates their attentiveness to the human element of managing wealth—and it’s a trait you need to demand from a professional you work with.
Once you’ve chosen the way you want to proceed, a wealth planner and the team put the plan in motion. Implementation—taking action—is typically very straightforward, and it should be. By this point, the hurdles have been identified and the approaches to surmounting them have been specified. This doesn’t mean implementation is easy; it often demands a great deal of work. However, it should be familiar ground for wealth planners and is something they and their teams do extremely well.
Laws change. Lives change. So it’s smart to ensure that any wealth planning you do stays up to date with such changes, and that it remains positioned to generate the results you want. Therefore, a major aspect of the Virtuous Cycle approach is to continually monitor any and all changes that could impact your future success—and to make modifications to the plan as required. This is how the wealthy ensure that their wealth is being managed well consistently over time.
Ongoing monitoring usually comes in four forms:
The upshot: Wealth planning should be a continuous process of refining goals and needs along with the strategies and tools to achieve them. The same should hold true for you and your wealth plan. Think about it: If your plan becomes outdated—it no longer reflects your situation and needs, or the tools it uses are suboptimal—it’s you and the people most important to you who lose out.
Armed with this information about what Virtuous Cycle wealth planning looks like and how it operates, you can determine whether the process your existing financial advisor is delivering has all or most of these components. If so, it’s likely that your financial life is being managed in a comprehensive, holistic way—so that all solutions work in concert on your behalf.
If not, it may be time to seek out a financial advisor with the capabilities to deliver this type of experience and these compelling benefits. You might consider getting a second opinion on your finances—and on the advice you’re currently receiving about them. A comprehensive review of where you are today, where you want to be and the gaps that exist may indicate that it’s time to find the expertise that will truly add value to your life—and the lives of those you care about most.
Disclosure: We define elite wealth managers as financial advisors with at least five years of experience who offer one or more of the following services along with investment management: tax mitigation, business planning, wealth transfer, asset protection and charitable giving. Typically, elite wealth managers deliver these services in conjunction with one or more specialists in a given area.
This report was prepared by, and is reprinted with permission from, VFO Inner Circle. AES Nation, LLC is the creator and publisher of VFO Inner Circle reports.
Disclosure: The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra IS or Kestra AS. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by Kestra IS or Kestra AS for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS.
Fusion Wealth Management is not affiliated with Kestra IS or Kestra AS. https://www.kestrafinancial.com/disclosures
VFO Inner Circle Special Report
By Russ Alan Prince and John J. Bowen Jr.
© Copyright 2021 by AES Nation, LLC. All rights reserved.
No part of this publication may be reproduced or retransmitted in any form or by any means, includ- ing, but not limited to, electronic, mechanical, photocopying, recording or any information storage retrieval system, without the prior written permission of the publisher. Unauthorized copying may subject violators to criminal penalties as well as liabilities for substantial monetary damages up to $100,000 per infringement, costs and attorneys’ fees.
This publication should not be utilized as a substitute for professional advice in specific situations. If legal, medical, accounting, financial, consulting, coaching or other professional advice is required, the services of the appropriate professional should be sought. Neither the authors nor the publisher may be held liable in any way for any interpretation or use of the information in this publication.
The authors will make recommendations for solutions for you to explore that are not our own. Any recommendation is always based on the authors’ research and experience.
The information contained herein is accurate to the best of the publisher’s and authors’ knowledge; however, the publisher and authors can accept no responsibility for the accuracy or completeness of such information or for loss or damage caused by any use thereof.
Unless otherwise noted, the source for all data cited regarding financial advisors in this report is CEG Worldwide, LLC. The source for all data cited regarding business owners and other professionals is AES Nation, LLC.