three components of collaborative wealth management

two older businessmen talkingbonus: the five meetings that will follow.

by anthony glomski
your $5 million high-net-worth practice

just like starting a business or building a practice, most of your successful clients know that nothing truly valuable is free or easy. same goes for their pursuit of financial freedom. it will take hard work, discipline and smart thinking to overcome and solve those challenges.

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but what most type-a business owners, executives and professionals you work with don’t realize is that they don’t have to do it alone. there is plenty of help available to empower them to close the gap between where they are today and where they want to be down the road. chances are they’re going to reach out to reach out to you (their cpa) first for guidance. will you be ready when they call?

if you’re familiar with a process called collaborative wealth management – many of our peers are not – then you’ll be in excellent position to be your clients’ go-to source of advice for the next chapter in their lives. collaborative wealth management is designed to help hard-charging entrepreneurs, executives and professionals get their financial lives on the right track – and stay there.

while all kinds of financial services professionals like to call themselves “wealth managers” or “wealth advisors,” only a small fraction of those people really are. more on that in a minute.

wealth management is about having all of your clients’ financial challenges answered and their entire financial situations enhanced. collaborative wealth management goes beyond simply investment solutions. it addresses a wide variety of financial needs that clients have throughout the many, varied phases of their lives – including before and after they experience a liquidity event. true collaborative wealth management enables you to help clients organize and manage their money so that all the components of their financial life work together toward one purpose – achieving the goals they really want for themselves, their families, their community and the world at large.

“wealth management” defined

just because someone says they provide wealth management services doesn’t necessarily mean they can actually deliver them. ask 10 “wealth managers” to define wealth management and you’re likely to get 10 different answers. and most definitions will be heavily focused on the standard investment management services that everyone else provides. in most cases, these standard services are not enough to make a meaningful difference in your client’s total financial picture.

true collaborative wealth management is designed to solve a full range of challenges that affluent entrepreneurs and other successful people face on an ongoing, long-term basis. most importantly, collaborative wealth management coordinates all aspects of a client’s financial life that must be addressed if they are hoping to build a secure and meaningful future.

collaborative wealth management accomplishes this in three ways:

  1. using a collaborative process to gain a detailed understanding of your client’s deepest values, goals and most important financial wants and needs. a collaborative approach enables you to help clients clarify what is most important to them and to craft a long-range and measurable wealth management plan that’s designed to meet those needs and goals. the process is designed to foster an ongoing and dynamic relationship between you and your client to ensure that their needs continue to be met as their lives evolve over time.
  2. going beyond investment basics to use customized solutions to fit a client’s unique needs and goals. the range of interrelated financial services and tools might include, for example: investment management, advanced retirement planning, insurance, estate planning, business and exit planning, pre-liquidity planning, charitable gifting and wealth protection.
  3. implementing these customized solutions in close consultation with your client’s other professional advisors. wealth management enables you and your client to coordinate efforts closely with other trusted advisors (as desired) on an ongoing basis to identify your client’s specific needs, and to design custom solutions to help meet those needs.

three key components of true collaborative wealth management

wealth management consists of three key components, summed up in the following formula below that specifically addresses and solves the most pressing financial challenges faced by business owners and other successful people:

collaborative wealth management (cwm) = investment consulting (ic) + advanced planning (ap) + relationship management (rm)

let’s take those components one at a time:

1. investment consulting (ic). this component deals with the overarching goal shared by most successful entrepreneurs and their families: to make consistent, smart decisions about their finances. investment consulting aligns their financial assets to their goals, their return objectives, their time horizon and their risk tolerance. it is the foundation upon which a true collaborative wealth management solution is created.

through ic, you can address what is perhaps the most pressing specific financial issue faced by successful entrepreneurs – wealth preservation. they want to keep the money that they have worked hard to earn – and not have it unjustly taken.

2. advanced planning (ap). this component addresses a broad range of important financial needs in five key areas that go beyond simply investments:

a) mitigating taxes: enhancing wealth by, among other things, reducing the impact of taxes on a client’s bottom line and decreasing their borrowing costs. as a cpa, this is right in your wheelhouse, but you may not have thought about tax mitigation within the broader concept of advanced planning.

b) transferring wealth: determining how a successful client’s money can best support their children, grandchildren and other family members, as well as causes they care about – all while minimizing taxes paid to the government.

c) ensuring that assets are not unjustly taken: protecting the money successful clients have earned by safeguarding it from creditors, lawsuits, vengeful ex-spouses and other parties who could seek to possess their assets.

d) maximizing charitable giving and planning: helping successful clients leverage their money to magnify the impact they can have on their community and on society at large.

e) defining the next chapter of a successful client’s life: this is about helping them formulate a plan for remaining relevant and engaged and having a true purpose in life.

these non-investment-related concerns are hugely important to your client’s long-term financial success. yet they are often overlooked, or viewed (incorrectly) as secondary concerns – even by many financial professionals. research from ceg worldwide found that merely 6 percent of financial advisors (one out of 16) are helping clients with advanced planning issues beyond their investments. therefore, very few investors address these five ap concerns above in any systematic, comprehensive way.

many successful entrepreneurs are no longer working with the right advisors by the time they get to the planning stage for exiting their businesses. it doesn’t mean those advisors aren’t good at their jobs. it simply means they aren’t familiar with – and don’t offer – many of the advanced, top-tier wealth planning solutions that successful entrepreneurs need to achieve tremendous personal financial success going forward. where do you think you would fit in right now?

we’ll talk more about these solutions shortly.

3. relationship management (rm) is the third and final component of the collaborative wealth management process. as a relationship manager, you need to start thinking like the quarterback of your client’s financial life, not just as their tax preparer. to fulfill that role, you may have to get outside your comfort zone by assembling a team of highly specialized experts and oversee and coordinate their efforts all on your client’s behalf.

this team of experts could include attorneys, business consultants, valuation and risk specialists, tax experts, and even financial therapists. no two client situations are the same. relationship management is a key part of building and maintaining a collaborative wealth management process. when done correctly, rm can provide you with a full range of expertise and “bench strength” that’s built to address the complexities of a client’s wealth. very, very few clients, no matter how smart and hardworking, have the bandwidth or knowhow to assemble an expert team on their own. that’s where you come in as their personal cfo, or perhaps coo of a more robust solution like their virtual family office (vfo)

next, we will discuss the inner working of true wealth management process and the milestones you need to set for clients to get them on the path to financial freedom.

the (true) collaborative wealth management process: a framework for success

regardless of which acronym(s) you have in addition to your cpa credential, the only way to assure clients and prospective clients that you’re a true wealth manager is to have a carefully defined wealth management process in place.

let’s take a closer look at the process:




    1. a series of actions or steps taken in order to achieve a particular end

if you take nothing else from this post, remember that having the right framework for collaborative wealth management is a prerequisite to success. the collaborative wealth management approach usually consists of a series of five meetings. each meeting will enable you to identify your client’s unique and specific challenges and help you design and implement a range of tailored solutions. let’s take a closer look at those five types of meetings and how they fit together in the process:

1. the mutual discovery meeting. the first step is to help your client accurately uncover and clearly measure what they want and need most out of life – today and in the future. without knowing what they want their money to accomplish, even the best financial strategies in the world won’t be of much help to a highly successful person.

with that in mind, the initial mutual discovery meeting is centered on a detailed interview process that enables you to define your client’s financial needs and goals, and to determine where they are in life today. this gives you the information needed to create a “comprehensive client profile.” this profile is used to create solutions that are customized to each client’s unique situation, and to lay the groundwork for working with other advisors (attorneys, risk specialists, planned giving specialists, exit planning consultants, etc.) who may be involved in the wealth management process.

because this part of the process is so critical to the success of your client relationship – and because few financial advisors ever do a formal mutual discovery meeting interview – we focus extra attention on this step.

2. the wealth planning meeting. this meeting is centered on two key elements:

  • a complete diagnostic overview of your client’s current financial situation.
  • presentation of a recommended plan and policy statement for achieving the client’s investment-related goals.

these elements are based on the information that was uncovered during the mutual discovery meeting. these recommendations are based on the four key drivers of investment success:

  • return,
  • risk,
  • costs and
  • taxes.

the plan presented in this meeting becomes your actionable investment plan, which is structured to accomplish two main goals:

  • bridge any gaps between where your client is now and where he or she wants to be.
  • maximize their probability of achieving well-defined investment goals.

in short, the investment plan serves as the road map that will guide your client through the journey of growing, preserving and passing on their wealth over time. having a plan in place ensures that rational analysis – not emotional reaction – is the basis for the investment decisions that you and your client make together.

3. the mutual commitment meeting. before your client commits to a wealth management investment plan, make sure they consider the plan very thoroughly. at this meeting, which occurs after you have reviewed the plan carefully with your prospective client, go over any questions or concerns you and your prospective client (and their family) may have about the plan to determine whether to move ahead and implement the recommended investment strategies. only after your prospective client has completely approved the investment plan should it be put into motion. let them decide how often they wish to have future meetings with you and the ways in which they prefer to be contacted – phone, email, text, snail mail, etc.

4. the 45-day follow-up meeting. within 45 days of implementing your client’s investment plan, there is a great deal of legally required paperwork for them to complete. successful people like your client are extremely busy and they may find all the forms and emails a bit of a nuisance. the 45-day follow-up meeting helps you and your client organize the various statements they have received. the meeting also gives you the opportunity to help them understand the financial paperwork involved that will allow you to work together legally. this meeting is also an opportune time to review any initial concerns your new client may have about working together – encourage them to ask questions now – in the early stages of your relationship. there is no better time to clarify that the plan is specifically designed to help them preserve their hard-earned wealth.

5. regular progress meetings. very important: the creation of a wealth management plan is not a “one and done” exercise. it’s an ongoing process. over time, the markets change and, more importantly, clients’ lives change – especially in the wake of a sizable liquidity event or inheritance. it’s important to review and update their plans consistently. at regular progress meetings, a client’s current financial position is compared to their plan to assess the progress you and your client have made together toward their goals.

included in this plan is a strategy for addressing your client’s critical non-investment goals. this comprehensive blueprint for addressing their advanced planning needs will be developed in coordination with a network of professionals such as attorneys, risk specialists and tax specialists. at subsequent progress meetings, you and your client can decide how to proceed with specific elements of the wealth management plan. over time, every aspect of their complete financial picture can be effectively managed.

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