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Read on to learn how to work and plan well with your advisors in this month’s edition of Family Office Perspective.

The Wealth Equation:
FW = R (HC + RC)

Your family wealth is equal to the sum of your people and the quality of their relationships, as amplified by your resources.

Your family wealth strategy aligns your desired outcomes with your goals. To clarify your goals, keep answering the question:

“So what is all this money good for?”

To which no one says:

“To add stress to my life and make my tax professionals my closest advisors because of the complexity of my affairs.”

Like, literally, no one says something like that…

This month’s perspective is on working with advisors. Your relationship with your advisors is very important. Ideally, they bring calm to the complexity. There are too many topics regarding the importance of advisors to reduce them all to one digestible perspective, and so with the value of your time firmly in mind, let’s address the elephant in the room – alignment.

What are your advisors’ incentives and how do they align with accomplishing your goals?

Being paid by the hour or by the project breeds a peculiar incentive misalignment. Both client and professional are incentivized to reduce the time they spend together:

  • the advisor is misaligned because they must exhibit efficiency, and
  • the client is misaligned both because of cost management for by the hour engagements, but also, the feeling that if they are not efficient themselves, they are somehow wasting a busy person’s time.

This latter behaviour may be exclusively Canadian, to our foreign friends – (please tell me if this resonates at all?). We are generally careful about other people’s time.

I wanted to focus on this misalignment because these incentives can lead both parties astray on the extremely important matters that are not urgent, specifically on wealth planning and strategy.

Here are examples of ways that the client and professional often allow misaligned incentives to disrupt effective strategy execution:

  1. Lawyers fail to explain key aspects of their documentation;
  2. Accountants fail to explain key takeaways from their financial reporting;
  3. Professionals miss opportunities to strategize with their clients proactively and help plan for future events;
  4. Clients hesitate to approve interactions between their teams and their advisors; and
  5. Actions are taken by professional advisors that don’t align with the client’s goals.

Invest your time and money into your understanding

Like preventative health, the client must take their planning affairs as seriously as their advisors, lean in, and work together on the matter. This can be daunting; an obligation to rise to the level of knowledge regarding a complex matter as their advisors’ knowledge.

Yes, there is a commitment to literacy required, but less than you probably believe. Certainly less than your advisors expect of you. Pretend (or actually!) present a planning concept to your kids as a measurement of an acceptable standard of understanding. Don’t seek and expect perfection.

By obtaining this level of understanding, you are setting yourself up for the most important aspect of working with advisors – ensuring they understand and are being held accountable to your goals during strategy planning.

Strategic planning sessions

Careful attention to goals alignment during major actions is more common but families get further by planning even without major tasks on the near horizon.

Take this from a former hourly rate professional: we love when our planning and strategy advice is valued. We love when clients want to take the extra time to understand what we are working on for them. But not all professionals will realize when to lean in.

Create the space for your advisors to help plan. Ideally, have quarterly meetings with integrated planning topics in mind. Bring the Agenda and let the pace create openings for matters previously unconsidered. Be curious. Bring a humble mindset. Ask the questions truly on your mind and not the “right questions”.

You will be surprised how well your advisors plan together to match efforts to your ideal outcomes.

I believe the quality of an advisor ecosystem correlates almost perfectly to effective generational wealth strategies. Understand their incentives and create the safe space for them to be a part of your future strategically. You will be rewarded.

And if you feel like strategic planning and collaboration are not tasks your trusted advisors would relish, you had better go find better ones. Don’t settle!

I’ve started to complete Family Wealth Strategic Reviews. It has been really rewarding so far and I’m just getting started. I will be launching this service on LinkedIn in January and have only 24 spots available for 2024 – just email me to get started!

To the journey,

Adam Hoffman, LL.B, TEP
Fiduciary, Trustee and Advisor