Posted on: June 25th, 2022
When it comes to our efforts to make smart financial decisions for ourselves and our families, there’s one group we like to look to for ideas: We call them the Super Rich—people with a net worth of at least $500 million that they built themselves through their hard work and savvy actions.
Given their sizable wealth, it’s not difficult to see why one might want to look to the Super Rich for guidance and subtle clues about what works when it comes to generating success. Interestingly, however, their clues often aren’t terribly subtle—instead, a look at the Super Rich’s behavior usually provides a clear map of the road they took to get to where they are today.
For example, take an issue that may be at (or near) the top of your list of priorities: managing your wealth so you can intelligently build it, safeguard it and spend it to pursue your goals in life.
Based on our experience serving and working directly with the Super Rich, we find that they tend to adopt a few principles that, by and large, help generate their wealth management results. Four of these principles, in particular, stand out as key drivers of success.
Have you ever heard anyone proclaim that they wanted to work with a subpar financial advisor—or an accountant who is “just okay”? We hope not! If given the choice, people would prefer to work with top-tier professionals—experts capable of delivering great results.
Trouble is, there may be professionals who want to do business with you whom you should avoid, and it’s not always easy to identify them. Some are Pretenders. They mean well and genuinely want to bring significant value to your financial life—but they lack the necessary skills or relationships with other professionals to make that happen. You might not end up in bad financial shape by working with a Pretender, but you also are unlikely to see the results you most want.
Then there are the Exploiters. Often, they are very capable and technically skilled. The problem: They tend to promote and implement highly aggressive solutions that may look cutting-edge and brilliant today, but that run the very real risk of blowing up on you down the road—perhaps years or decades after your last interaction with the Exploiter. Finally, there are Predators. Simply put, these are criminals who want to take your wealth. Thankfully, they’re the group you’re least likely to encounter—but as your wealth grows, so too does the possibility that you’ll be approached by someone who wants to separate you from your assets.
By and large, the Super Rich avoid these inferior professionals by working with people who are recognized as experts by other professionals and by other wealthy and successful individuals. In short, referrals from high-quality sources are key.
These prominent authorities are not famous because they say they are. They are renowned among their select wealthy cohorts and other high-quality professionals because they share meaningful insights, proven methodologies and potent solutions with others—even their competitors. For these elite professionals, it’s all about raising the bar for everyone.
The upshot: Being methodical and thoughtful can help you find the top-of-the-line experts who can deliver the greatest value. Concentrate your search on experts who are prominent in their fields. Very important, talk to other professionals you trust. You can also solicit recommendations from your peers. These actions can dramatically increase the probability of working with an extremely talented, sincere and trustworthy professional.
All top wealth management professionals will have exceptional technical skills. Indeed, such expertise should be “table stakes” when considering which advisors, CPAs, attorneys and other professionals to work with.
But truly exceptional professionals will also possess an additional trait: the ability and willingness to understand their clients on a deep level beyond the numbers. Such attentiveness to the personal and emotional components of wealth planning—the human element—is essential if you’re seeking Super Rich-level results.
The reason: Most (perhaps even all) legal strategies and financial products have become commoditized. Focusing on the human element—your values, your goals, your biggest concerns and so on—is what truly produces optimal results today. Therefore, you need to find and work with outstanding professionals who are intensely focused on you and your world, and the people you care about most—not simply on financial tools and solutions.
This means the professionals you work with should be taking five key action steps in their dealings with you:
Notice that the first four action steps deal with the human element—understanding you, your goals, your preferences and your values. It’s after those four steps are taken that a professional should bring his or her technical expertise to bear. Only by truly understanding their clients will professionals be in a position to produce truly outstanding results.
Have you ever just gone along with a plan despite not really knowing where it was supposed to take you? That might work when the stakes are low—but not when it comes to managing your wealth. The Super Rich make sure they have a very good grasp of what they agree to when it comes to their financial and legal decisions.
You should, too, of course. That doesn’t mean you must have a deep-dive understanding of all the technical aspects of your financial plan. But you do need to possess a clear recognition and understanding of the benefits, limitations and implications of the legal strategies and financial products you are using—or considering.
Example: When people use irrevocable trusts, it means they cannot completely change their minds. For instance, when a person sets up a charitable trust, there are tax benefits. But he or she cannot, years down the road, decide to simply cancel the trust and take back the money.
Too often, individuals and families with significant wealth don’t really understand what they’re signing up for when they agree to implement a particular financial solution or tool or strategy. It can be extremely problematic, of course, to not understand the assured, likely or even long-shot consequences of actions taken with your wealth.
It’s the responsibility of any professional you work with to make sure you know what the outcomes of a solution should be as well as the limitations it may place on you and your agenda. Here again, the human element plays a key role—as does a professional’s ability to communicate his or her expertise in ways that make sense to people who aren’t part of their industry and who don’t hold advanced degrees in finance.
Advice: Be ready and willing to be assertive with financial professionals. If you don’t understand the big picture of a strategy or solution—such as why it’s being proposed or how it might behave in a variety of possible scenarios—ask for the answers. It’s perfectly fine to say that you can’t move forward until you are comfortable that you understand the implications (and potential implications) of a proposed strategy. We find that the Super Rich have no problem being assertive in this way with their professionals.
When dealing with the Soviet government in the 1980s, President Reagan repeatedly used the phrase “trust but verify.” The Super Rich seem to be big proponents of that proverb, as they’ll regularly seek out stress tests designed to verify whether a plan or proposed plan will act as expected.
If you’re unsure or uncomfortable about a proposed wealth management solution, you should look for verification. This is especially true if the proposed solution comes from someone other than a trusted advisor you already work with. In such cases, it’s often smart to get a second opinion from your trusted advisor with high-level capabilities.
Similarly, it can be a good idea to put your existing wealth plan through its paces to determine whether it’s still likely to deliver the results you want—and in the way you want. Changes to laws and rules, as well as new developments in your own life or the lives of your heirs, could potentially mean that your current solutions are set up to move you in a direction you no longer want to go. Stress testing can uncover those types of situations so you can course correct. It also can identify errors in a plan before they become costly—potentially saving you substantial sums and stress.
Adopting these drivers of success can’t guarantee that you’ll elevate yourself to the wealth level of the Super Rich, of course. But when it comes to effectively managing your wealth, we think it makes sense to understand some of the key behaviors that are often exhibited by highly successful, extremely affluent individuals and families. Armed with their best practices, you can potentially position yourself to make better decisions about your wealth by working with professionals who truly have your best interests in mind—and by making sure you are taking actions to help keep your plan on track.
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.
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