When selecting an employee – employers want the right person for the job – they have two or three meetings, ask ‘open’ questions, ask them to complete a psychometric test, and do a background search as to their criminal record and credit worthiness.
However, when selecting an adviser, it seems the importance of rigour goes out of the window.
UHNW families ask a friend for a recommendation! But has the friend had experience of lots of advisers to advice you who is best for you?
Some UHNW families are influenced by awards? But having been given awards and sat on a panel of judges picking top advisers – I can honestly say most are not picked on objective criteria – it is based on who they know and heresay!
In my book ‘When you are Super Rich who can you Trust?’ I give this matter some considerable thought.
When choosing and adviser this is my initial check list
· What qualifications does the advisor have and has anyone checked them?
· Ask for a curriculum vitae and check for oddities in their professional career
· Take references
· Ask for case studies, what have they done for their clients? Do their clients have the same concerns and issues as you?
· Testimonials: what do their clients say about them?
Do you feel you can trust them?
· Are they interested in finding out about your goals and assisting you in meeting them?
· Are they dominating the conversation with their jargon and projections?
· Are they trying to shoehorn you into what they want to do for you, rather than what you want?
How secure are they?
· Could a rogue dealer hold the organization and your money to ransom?
· Have their been any irregularities or warnings? What for?
· What are the policies and procedures to protect client confidentiality?
How do they pay themselves and reward themselves?
· In particular you need to know how quickly the client pays for the services. The average lawyer has in excess of 90 lock up days – which is a good indicator of client dissatisfaction
· Look at their engagement letter, get a second opinion if necessary
Very few advisers are taught how to build trust with clients. Trust can be earned but not by giant bounds – only over many, small steps. Most advisers are not interested in doing the small steps with the client, they just want to get on with what they are good at.
For example; Joshua wants to swap his mansion with his son Martin’s lodge. They are thinking of simply moving homes. If they did so however, they could end up in a tax nightmare. Capital gains tax relief on future gains could be lost and the extra inheritance tax on Joshua’s death on the mansion could become payable when both taxes could have been easily avoided.
But, Joshua does not have a trusted relationship with his adviser – Alan. Last time Alan did some work for him, aware that Joshua did not like paying legal fees, he tried to keep the costs down by not keeping Joshua informed as to progress at each step of the way. Naturally enough when the bill arrived at the end of each month Joshua nearly fainted, he had no idea so much work had been done, of which he was totally unaware. This lack of trust also led him to suspect that Alan was ‘padding’ his bill – keeping the clock running as he went to get a coffee or worse, just putting down time, when he was not working on Joshua’s matter.
The last thing Joshua wanted to do was to pick up the phone to Alan to ask him whether he was doing the right thing in swapping homes with Martin. So, Alan did not get further work and Joshua was walking towards a tax nightmare.
Fees are always sensitive with professional advisers. But picking an adviser because they have a low charge out rate does not always mean that the bills end up lower – it depends on the number of hours the job takes.
As I say in my book ‘From my experience it is not always true that you get what you pay for’ In fact in most cases the opposite is true. ‘Certainly, the more reputable the organization the more training the staff are likely to have had’ But training on what? If they are being trained in matters which do not affect you, you are not getting the benefit of their additional knowledge. Many of the large organizations with a good reputation are essentially generalists, so that ‘if you need niche services you may have to go to a specialist boutique to find the relevant expertise’. The larger organization may say it can do the work – but if it has not done this type of work before – it will be very expensive and will not benefit from experience.
Time and again clients place professional knowledge fairly low on the criteria for choosing an adviser. Mistakenly they believe that all advisers have the same level of knowledge. But, it is simply not true – not all advisers are experienced in all areas and even when they do have the knowledge may not have the experience in knowing how at apply the knowledge to the facts of your case.
If you would like to buy ‘When you are Super Rich who can you Trust?’ simply buy from Amazon or from www.garnhamfos.com or if you would like to book a meeting with Caroline simply call on 020 3743 7422.