Challenges of advising the wealthy and entrepreneurial
NEW YORK, July 9, 2013 /PRNewswire/ — In the period of post-Bernie Madoff and Wall Street meltdown, trusted attorneys, CPAs, wealth professionals and bankers are more difficult to identify. There are truly extraordinary advisors who merit their clients’ trust, which contributed to their wealth. However, overreliance on one super-star, when it takes a team, delivers less desirable results. More commonly, the affluent chose advisors with whom they are familiar, but skill gaps can produce mediocre results. Worse, poor outcomes create mistrust among family, staff and advisors; especially around planned transition events, such as the sale or transfer of highly appreciated property or equity. This is evidenced by 80%+ of families not implementing a business succession plan and 70%+ of second generation wealth selecting a different advisor. Unplanned events, such as death, disability or divorce, accelerate disruptions. As a consequence, many affluent feel woefully underserved, frustrated and isolated. They then defer actions or focus on service fees to grasp at a sense of control, which seldom is achieved.
Amplifying the six ‘Ds’
Contrary to popular wisdom, the 1% affluent and especially the 1/10th of 1% ultra-affluent often have unique challenges. First, their wealth is often concentrated in illiquid assets, such as real property and private businesses. Second, risk concentration while it can be immensely successful is rare. It amplifies emotion-based issues such as disputes, death, disability, dysfunction, divorce and departure. Yet, advisor focus tends to be on technical issues, such as tax reduction and asset allocation/protection with language and concepts that can be confusing, conflicting and/or misaligned. Sadly, as a result, most wealthy expecting to have more quality time to enjoy their success and future legacy often have less.
After two decades working with America’s wealthiest families and their advisors, Robin Coady Smith, Co-Founder & Co-Consigliere of Privatus CI3O Services, LLC, found an elegant solution to these wealth creation and transition challenges when cohesive collaboration and strategic direction is lacking. Ms. Smith states, “In almost every discussion with family, staff and advisors, the issues of empathy and strategic alignment percolate to the top. Absent quantitative and qualitative benchmarks, achieving expectations with a clear path is allusive. Privatus CI3O identifies, implements and integrates the family, staff and advisors as well as fills gaps so economic and emotional outcomes are realized.”
Carl Sheeler, PhD, ASA, Ms. Smith’s partner and National Managing Partner of Business Valuations, Ltd. comments, “Having been born on Brooklyn’s ‘wrong-side-of-the-tracks’ to first generation parents and combat service in the Marines, I understand fear of failure. Most affluent entrepreneurs have sacrificed. They deserve the time and peace of mind wealth should bring. By working closely with advisors, we created tools and language that achieves life-altering and measurable results. We are in the risk measurement, risk reduction and value(s) creation business. Having a thankful owner say, ‘You get me. You get my family. You get my business. You created clarity from chaos. We have more time to do what matters. Money didn’t buy me happiness, but Privatus did’ is music to Robin’s and my ears.”
Privatus CI3O Services, LLC augments existing skills to find solutions for U/HNW clients challenged by planned and unplanned transition events. They are independent, strictly fee based and sell no products. Since 2011, they have offered 8- to 10-figure families of wealth a 100% guarantee for services – unheard in the professional services industry. Since 1954, Business Valuations Ltd. has served midmarket business owners and their advisors for tax, transaction and transfer purposes as well as disputes. Dr. Sheeler has been the firm’s steward since 1992 and was the 2012 Worth Magazine’s Leading Advisor. His doctoral dissertation addresses private company illiquidity. He authored the valuation chapters for the AICPA’s and California Bar’s Succession Planning Manuals. Ms. Smith entered the Family Office scene in 2002, a reformed wealth manager sensitized to affluent families’ unique challenges. She has written articles on ‘Matters of Family Office Outsourcing’, ‘Understanding Risks’, and a white paper titled, ‘A Comprehensive View of A Private Family Trust Company’ is pending.