Providing holistic advice requires coupling of skill sets

Every successful company has a CEO who provides leadership, direction and coordination to the overall business. And that CEO is usually supported by a strong team of executives with distinctive skills, who work closely to build the business. Imagine the mess if there were no direction or coordination, and if each member of the team worked utterly independently.

In similar fashion, families with significant financial wealth need an integrated approach to manage their affairs. Helping them cope with the diverse issues of their lives and wealth is a complex task – from investments and tax planning to foundations and family education – and central to the work of family offices and other integrated advisors. In a recent article in the Journal of Wealth Management, Miles Padgett and Louise Wright Sellers laid out key attributes an effective integrated advisor possesses. At the most basic level, he or she must have:

• superior organization and detail orientation;
• competency in key technical areas, including tax, investment theory and practice, insurance, property laws, and accounting;
• experience in adjunct areas, including family governance, philanthropy, education, and performance reporting; and
• useful exposure to the structuring of commercial transactions, litigation process, dealing with trusts and estates (usually garnered by working with multigenerational families whose circumstances are truly complex).

In addition, they argue, the integrated advisor needs:

• a fundamental drive to solve problems;
• natural curiosity, so fresh ideas are continually generated;
• superior listening skills and empathy [DASH] integrated wealth management is about the client and doing what’s best for him or her;
• lack of contentment with the status quo; and
• willingness to make hard, thoughtful decisions.

No one family office advisor has all of these traits. An integrated advisory firm typically works as a team to ensure the broad experience required is there for every single client.

When participants in a recent study by the Family Wealth Alliance ranked their biggest challenges, not surprisingly, finding and retaining staff ranked number one. That’s because integrated advisors are a rare breed, and there are several reasons. First, the discipline isn’t yet recognized as an independent profession, so few prospective advisors seek integrated education and training. There also aren’t many institutions offering the necessary training (most training is relatively narrow and typically focused on one particular discipline, such as investment, tax, legal or insurance). This makes switching from a vertical (subject matter) expert to a horizontal (integrated client solution) advisor difficult.

Second, it typically takes years to build up the skills, expertise and experience to become an effective, practicing integrated advisor.

Lastly, not everyone has the temperament or interest to become this kind of advisor. But, despite the odds, a number of advisors have successfully made the switch. There is, however, another way to recruit. Firms can hire young, smart professionals with a base level of skills and then mentor them as integrated advisors. This is our approach and we’ve found the effort and time it takes to train people and build their skills is more effective than trying to change the habits and orientation of more experienced and specialized advisors.

While many of these younger people come with designations (such as CA or CFA), we also require they complete their CFPs within one year due to the integrated nature of that program. The Canadian Securities Institute also offers a designation called chartered professional, strategic wealth (Ch.P.), which also provides a strong foundation for an integrated advisor.

Posting the job opportunities on university alumni recruiting websites and on the CFA Society and CA sites can be a highly effective technique for recruiting newer professionals, but it takes time. At the entry level, recruiters don’t typically add a lot of value, but they can help firms find technically sound professionals.

Fortunately, the wealth management industry seems to be moving toward a more holistic approach. But no matter the breadth and depth of skills of the integrated advisor, the complex needs of wealthy families will continue to require teamwork, cooperation and mutual respect among all the family’s professional advisors.

• Tom McCullough is the president and CEO, Northwood Family Office. LP