A Wealth Planning Process For Pursuing Success On Purpose

One of the best things you can do when managing wealth is to be extremely clear on what you’re looking to accomplish and what hurdles stand—or could stand—in your way.

Why? Success—in investing, in business, in life—rarely happens by accident. When you’re clear-eyed about where you want to go and what could get in your way along the journey, you can both create a better map and build in better contingency plans.

The good news: There’s a process you can implement in your financial life that can better enable you to resolve your issues and arrive at your desired destination.

SIX STEPS THAT BUILD ON EACH OTHER

We call the process the Virtuous Cycle because it’s a multistep approach that continually reinforces itself over time. The Virtuous Cycle has six components (see the chart on the next page) that are highly customizable.

  1. Profiling. Truly effective wealth planning happens when you—and any financial advisors you work with—have a deep understanding of yourself and the people in your life who will be involved in, or impacted by, your planning decisions. Without these insights, all the specialized financial expertise in the world or the most advanced solutions are of little use. It’s like a doctor treating a patient’s illness: If the diagnosis is incorrect, the treatment is not likely to be effective.

That deep understanding has to include your financial situation and goals, of course. But it also needs to go well beyond that information to include your financial values, your interests, your most important relationships and other key factors. The goal is to develop an extremely detailed and expansive understanding of you and your world. That information, in turn, allows your advisors to work effectively with a professional network of experts.

  1. Consultation with a professional support network. No one—not even the very best financial professional out there—is expert enough in all areas of managing wealth to deliver the highest-quality advice across the board. The best advisors realize that fact and therefore create and maintain strong networks of other expert professionals to turn to when necessary. The very best of these professional support networks have four characteristics:
  • Specialized expertise. The members of the network should be top authorities in highly specialized areas that are relevant to your financial life.
  • Integrity. The highest ethical standards are indispensable in all aspects of wealth planning.
  • Professionalism. The network participants must embrace professionalism in every way.
  • Personal chemistry. Everyone within the network must “play well together in the same sandbox.”

FROM “WHAT IF” TO IMPLEMENTING A PLAN

  1. Scenario thinking. With profiles created and a professional network in place, advisors can engage in scenario thinking with you. Simply put, this is a method of generating alternative futures—it’s when all the “what if” questions are asked and answered. Some possible examples:
  • “What if I die early, while the children are young? Who will decide when they should have unrestricted access to the money?”
  • “What if I want to pay the lowest possible tax bill on my investments without having to give up control over how the money is managed?”
  • “What if someone wants to take advantage of us when we’re a lot older and not as with it?”
  • “What if someone falls in my building, hurts himself and sues?”
  • “What if I want to expand my business to other countries and want to legally minimize the amount of taxes I will have to pay?”

From the meaningful possible outcomes devised in this phase, the most viable course or courses of action are selected.

  1. Framing the recommendations clearly. At this point in the process, you’re looking for a wealth manager to communicate the various scenarios and recommendations to you in a way that makes a great deal of sense. Depending on the complexity of your situation, this might be very straightforward or quite complicated. What’s essential is that you understand—in broad stokes or in excruciating detail, depending on your preference—how the recommended solutions can enable you to achieve your agenda, and any limitations of those solutions.
  2. Implementation. Once you’ve chosen the way you want to proceed, the plan is put into motion. Implementation—taking action—is typically very straightforward, and it should be. By this point, the hurdles have been identified and the approaches to surmounting them have been specified. This doesn’t mean implementation is easy; it often demands a great deal of work. However, it should be something advisors and their teams do extremely well.
  3. Ongoing monitoring and refining. Laws change—and lives change. It’s smart to ensure that any wealth planning you do stays up to date with such changes, and that the plan remains positioned to generate the results you want. Therefore, a major aspect of the Virtuous Cycle approach is to continually monitor any and all changes that could impact your future success—and make modifications to the plan as required. Ongoing monitoring often involves periodic reviews and responses to important changes and innovations.

The upshot:  Wealth planning should be a continuous process of refining goals and needs along with the strategies and tools to achieve them. The same should hold true for you and your wealth plan. Think about it: If your plan becomes outdated—it no longer reflects your situation and needs, or the tools it uses are suboptimal—it’s you and the people most important to you who lose out.

 

Fidato Wealth LLC is a Registered Investment Adviser. This brochure is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Fidato Wealth LLC and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Fidato Wealth LLC unless a client service agreement is in place. Copyright 2018 by AES Nation, LLC. If you are not the intended recipient, or the employee or agent responsible for delivering the message to the intended recipient, you are notified that any review, copying, distribution or use of this transmission is strictly prohibited. If you have received this transmission in error, please (i) notify the sender immediately by e-mail or by telephone and (ii) destroy all copies of this message. Please note that trading instructions through email, fax or voicemail will not be taken, as your identity and timely retrieval of instructions cannot be guaranteed.  If you do not wish to receive marketing emails from this sender, please send an email to sayhello@fidatowealth.com.

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Finding Advisors Who Are Truly Client-Centric

It’s extremely common for financial professionals these days to advertise how well they focus on their clients—and with good reason: After all, you’re probably more likely to consider working with people in just about any capacity who say that they will make the experience “all about you.”

The good news is that, in our experience, more financial advisors and wealth managers today are paying greater attention to their clients’ needs and concerns than they did a few decades ago. But although advisors have become better at understanding their clients on a deeper level, we see that advisors don’t always go far enough. In contrast, elite wealth managers actually use a process for becoming intensely client-centric—getting to know their clients extremely well so that they can offer a broad range of solutions that are both impressive technically and highly aligned with the results their clients want most.

With that in mind, it’s a great time to assess your advisors’ level of client focus and determine whether you’re getting the experience you want and need.

GAINING DEEP KNOWLEDGE

When it comes down to it, you want to see whether an advisor takes the time to truly understand you—as a person, a member of your family, an investor, or whatever the case may be.

One of the signs that can indicate that an advisor is client-centric is if they employ a process that helps them see you as a total person across many different areas. For example, consider the following form of client profiling that hones in on seven areas of a person’s life:

  • Values. What is truly important to you about your money and your desire for success, and what are the key, deep-seated values underlying the decisions you make to attain these things?
  • Goals. What do you want to achieve over the long run—professionally and personally, practically and audaciously?
  • Relationships. Who are all the people in your life who are important to you?
  • Assets. What do you own—from real estate to investment accounts, restricted stock to retirement plans—and where and how are your assets held?
  • Advisors. Whom do you rely on for advice?
  • Process. How actively do you like to be involved in managing your financial life, and how do you prefer to work with your valued advisors?
  • Interests. What are your passions in life—including your hobbies, sports and leisure activities; charitable and philanthropic involvements; religious and spiritual proclivities; and children’s schools and activities?

Note that just one of the areas concerns assets. A full six of the seven are focused on helping the financial professional better understand who you are (and what you want to achieve) as a person, a spouse, a parent and so on.

The reason that’s important is because if financial professionals understand you at that deep a level, they can potentially be far more comprehensive in terms of the types of strategies they can offer you—and they can better identify the specific solutions within those strategies that really line up well with what you want to accomplish in your life.

Example: If all a professional knows about you is your investments and your retirement goals, the solutions he or she offers you will probably begin and end with those topics. In contrast, if that professional understands the hopes and dreams you also have for your children or grandchildren as well as the concerns you have about their ability to achieve those outcomes, the advisor can potentially craft a broader, more far-reaching plan.

Ultimately, you can think of all this as a process of deep discovery—about you and the people who are most important to you, and what you want most.

Conclusion

It makes sense to learn about the process that an advisor has in place to understand you. A process that seeks to help an advisor know you in a full and comprehensive way can be a good sign that an advisor “walks the talk” when it comes to being client-centric.

Fidato Wealth LLC is a Registered Investment Adviser. This brochure is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Fidato Wealth LLC and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Fidato Wealth LLC unless a client service agreement is in place. Copyright 2018 by AES Nation, LLC. If you are not the intended recipient, or the employee or agent responsible for delivering the message to the intended recipient, you are notified that any review, copying, distribution or use of this transmission is strictly prohibited. If you have received this transmission in error, please (i) notify the sender immediately by e-mail or by telephone and (ii) destroy all copies of this message. Please note that trading instructions through email, fax or voicemail will not be taken, as your identity and timely retrieval of instructions cannot be guaranteed.  If you do not wish to receive marketing emails from this sender, please send an email to sayhello@fidatowealth.com.

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Do You Know Your High-Net-Worth Personality?

One of the best ways to make smart decisions about your wealth is to work with professionals who are able to connect with you and relate to you. You want to surround yourself with experts who know you well enough to really “get” what you want your money to accomplish and why.

In fact, we’ve found over the years that a personal connection between advisors and their clients is as important to financial success as traits such as advisors’ competence and resources.

To get advice that works, it’s incumbent on you to understand your own high-net-worth personality so you can select and work with advisors who are an ideal match.

High-net-worth (HNW) psychology is all about understanding what the affluent want from the professionals they work with, as well as the “how” and “why” behind their attitudes and decisions about their money. Extensive research into HNW psychology has helped identify numerous HNW personality types. That said, most affluent investors fall into one of these five categories:

  • The Family Steward. Family Stewards’ chief financial and investment concern is taking good care of their loved ones. Their goals usually center on issues like paying for children’s tuition or passing on wealth to heirs. Family Stewards are often conservative financially, and want financial advisors who make them feel that their goal of caring for family is protected.
  • The Independent. This type of affluent investor wants the freedom that financial security ensures—freedom to do what they want, when they want to do it. To them, wealth is a means to a desired end. They want to work with financial advisors who can give advice that will allow them to attain—and maintain—financial freedom and flexibility.
  • The Phobic. Phobics don’t like investing, don’t understand it and don’t want to learn. They prefer to delegate investment duties to a financial advisor they trust and who demonstrates reliability and dedication.
  • The Mogul. Moguls seek power, influence and control, and they tend to view investing as yet another arena where they can exercise those things.
  • The Accumulator. These investors save more than they spend, live below their means and don’t show outward signs of affluence. They may have millions of dollars, but might wear only sale-priced clothes from discount stores. Their goal is capital appreciation, pure and simple. The more money they have, the better and more comfortable they feel.

Note: There’s nothing inherently good or bad about any of the personality types. Each one simply reflects someone’s core beliefs and ideals about money and wealth.

IDENTIFY YOUR HNW PERSONALITY

If you choose to work with an advisor, it’s important to partner with one who shares your particular HNW personality—or who at least knows how to work well with your type. We believe that working with an advisor who doesn’t understand or appreciate your core values could cost you financially.

Example: Say you’re a Mogul type who is seeking outsized returns and willing to take substantial risk to maximize the probability of obtaining your goal. You’ll probably be poorly served and disappointed by an advisor who favors conservative investments. Likewise, if you’re a Phobic and your advisor constantly wants to talk about the gyrations of the markets, you’ll find yourself having an unenjoyable investment experience.

So which HNW profile fits you closest? We tend to see that many people are Family Stewards—they do what they do in order to help give their spouses, children and grandchildren more opportunities in life.

If you’re not sure, write down some answers to these questions:

What would you like your investments to achieve? If you’re a Family Steward, your answers will revolve around what you would like your money to do for your family, ranging from funding the college education of a child or grandchild to taking care of an elderly parent to estate planning that ensures a harmonious division of assets for your children. You’ll want an advisor who focuses in those areas and has an in-depth understanding of families and family dynamics.

If, by contrast, you’re an Independent, your answers will probably include goals like buying your dream house or sailing around the world. In other words, you will place the highest value on using money to buy personal autonomy and freedom to do exactly what you want to do in life—and your advisor will need to understand and account for those drivers when serving you.

When you think about money, what concerns, needs or feelings come to mind? If you write down a phrase like “I want my money to grow as quickly and safely as possible” or “I want to have $5 million by the time I’m 60,” you can be pretty confident you are an Accumulator looking mainly to acquire more assets. That might mean you should seek out an advisor who pursues strong growth over time.

If you associate feelings of power, importance and control with money, you are most likely a Mogul. You see having more money as having more ability to influence people—ranging from family members to business contacts to community leaders—and events to your advantage.

How involved do you like to be in the investing process? If you feel investing is uncomfortable, a burden or even a bit scary, you are probably a classic Phobic—and you’ll probably want an advisor who doesn’t throw a lot of detailed information about investing at you.

Conclusion

Armed with a good idea of your high-net-worth personality type, you can assess whether the advice you are getting today reflects that type. It’s another key step in helping to position yourself to achieve an elite wealth management experience.

Fidato Wealth LLC is a Registered Investment Adviser. This brochure is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Fidato Wealth LLC and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Fidato Wealth LLC unless a client service agreement is in place. Copyright 2018 by AES Nation, LLC. If you are not the intended recipient, or the employee or agent responsible for delivering the message to the intended recipient, you are notified that any review, copying, distribution or use of this transmission is strictly prohibited. If you have received this transmission in error, please (i) notify the sender immediately by e-mail or by telephone and (ii) destroy all copies of this message. Please note that trading instructions through email, fax or voicemail will not be taken, as your identity and timely retrieval of instructions cannot be guaranteed.  If you do not wish to receive marketing emails from this sender, please send an email to sayhello@fidatowealth.com.

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Financial Planning for a Special Needs Child

 Raising children and grandchildren is challenging in the best of circumstances. But when a child has special needs or a disability, the hurdles can look more like mountains and the potholes can feel more like bottomless pits. 

That’s especially true when it comes to paying for the many expenses that can accompany raising a special needs child as well as positioning assets for the child’s future. 

The good news: There are savvy financial moves that parents and grandparents of children with special needs can make that may potentially deliver big benefits to both themselves and their kids—today, tomorrow and down the road. 

MULTIPLE FINANCIAL CHALLENGES 

Parents of children with special needs can face some unique financial concerns. For example, a child’s special needs often are identified when problems occur after the child is born—giving parents no advance warning or time to look into what it could take financially to address the issue. Also, while many health care needs require a one-time expense, special needs health care expenses are often ongoing—requiring monthly, weekly or even daily services that could be needed for years. 

What’s more, those ongoing costs might be highly inconsistent from year to year—making it even harder to plan. 

NAVIGATING TODAY’S EXPENSES 

Smart financial planning around special needs involves thinking about the foreseeable road ahead, along with the distant and more uncertain future. 

Start with some basic wealth planning, such as budgeting. In addition, many families qualify for financial help from government agencies. One example: Monthly Supplemental Security Income (SSI) is available to some individuals who meet the SSI disability standard. 

Important: Don’t assume you earn too much or are too wealthy to get any benefits. The rules can vary from state to state, making it possible you’ll qualify for some amount of assistance. 

That said, it’s important to look to more advanced solutions. One tool to consider: an ABLE account—essentially a 529-like savings plan to help families caring for children or adults with disabilities. ABLE account contributions grow tax-free and withdrawals are tax-free when used for qualified disability expenses. Anyone can contribute to an ABLE account, including grandparents. 

Another key benefit of ABLE accounts is that the contributions are shielded from asset-based limits that could jeopardize an individual’s ability to access government assistance. That means an ABLE account could be a good way to provide financially for a child with special needs without making a direct financial gift to him or her that could jeopardize access to other financial support. 

However, there are some potential downsides. Example: If the ABLE account exceeds $100,000, the individual is no longer eligible for SSI. 

WEALTH PLANNING FOR THE FUTURE 

Special needs financial planning also has to address estate planning, in the event you die and are unable to care for your child. 

Often, parents who want to help ensure their child with special needs will be taken care of after they’re gone will set up a special needs trust that’s designed to hold and safeguard assets to benefit the child. (That said, parents also set up these trusts while still alive to help supplement the cost of care.) The trust can be set up with terms and language for how and when the money should be used, although keep in mind that many specific terms must be met for the trust to be deemed acceptable. And as with many other types of trusts, a special needs trust can potentially protect assets if the child is sued or becomes divorced at some point. 

In general, there are two main types of special needs trusts that most families with assets to invest tend to consider: 

A first-party trust is set up when the assets contributed to the trust belong to the beneficiary—that is, your special needs child or grandchild. This can happen if the child inherits wealth or gets money from a legal settlement. The beneficiary is considered to be the owner of the assets in this scenario. The good news is that when those assets are put into a special needs trust, they’re excluded from government aid calculations determining eligibility for the types of benefits noted above. The bad news: As with the ABLE account, when the beneficiary dies, the government can claim assets still in the trust to reimburse it for payments it made. 

A third-party trust is used when the funding assets come from parents, grandparents or anyone other than the beneficiary (who in this case would not be considered the owner of the assets). A third-party trust also allows a beneficiary to retain his or her government assistance—but because the assets contributed belong to someone else, the government won’t seek to collect remaining assets when the beneficiary dies. The upshot: A third-party trust gives you more flexibility to transfer remaining wealth to another beneficiary (such as another child or a charity). 

(A third type of trust, a pooled trust, is aimed at families with relatively modest assets.) 

As with other trusts, you must carefully consider who is the right person to name as trustee and how to best fund the special needs trust—two issues we’ll explore in a future report that focuses on special needs trusts. 

CONCLUSION 

There are a number of steps that families with a child with special needs can take to help ease the financial burden of ensuring their children get the care they need, as well as set their children up for better and more stable financial lives as they grow up. 

Of course, there is no one-size-fits-all answer given that one family’s particular situation can be quite different from another’s. But for families experiencing the confusion and uncertainty that accompany raising a child with special needs, knowing that there are options to consider can be a helpful foundation from which to create a plan for today and well into the future. 

Fidato Wealth LLC is a Registered Investment Adviser. This brochure is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Fidato Wealth LLC and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Fidato Wealth LLC unless a client service agreement is in place. Copyright 2018 by AES Nation, LLC. If you are not the intended recipient, or the employee or agent responsible for delivering the message to the intended recipient, you are notified that any review, copying, distribution or use of this transmission is strictly prohibited. If you have received this transmission in error, please (i) notify the sender immediately by e-mail or by telephone and (ii) destroy all copies of this message. Please note that trading instructions through email, fax or voicemail will not be taken, as your identity and timely retrieval of instructions cannot be guaranteed.  If you do not wish to receive marketing emails from this sender, please send an email to sayhello@fidatowealth.com.

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Why Advisors Are Rethinking The 4% Rule

In this article from Financial Advisor Magazine, “Why Advisors Are Rethinking The 4% Rule,” Marissa Beyer of Fidato Wealth asks, “What happens if the stock market has a great one-to-two-year period and the account balance goes up—does the distribution amount get recalculated? What if the opposite happens, and the account value goes down? The rule also doesn’t account for unexpected expenses, such as healthcare emergencies, troubled grandchildren or ‘bucket-list trips.'”

A Wall Around Your Wealth: The Importance of Asset Protection

 Success can come with a major downside: It can make you a potential magnet for lawsuits—including frivolous and unfounded ones—and other attacks that can wreak havoc on your financial health and stability. 

Indeed, you may very well know someone in your life who has been sued. Maybe it was you! 

That means you’ve got to take steps to protect the assets you’ve worked so hard to build from being unjustly taken. Otherwise, you may jeopardize your financial security and that of your company and your family. 

WHY YOU NEED ASSET PROTECTION 

Asset protection planning as we define it is pre-litigation planning that is designed to deter lawsuits if possible—and if not, to encourage favorable settlements. 

The logic of asset protection planning is clear: You build a wall around your wealth that is as difficult as legally possible for litigators, creditors and others to scale. Instead of trying to fight it out with you in court for months or years and risk losing, the litigant sees that the only reasonable option from a legal standpoint is to settle for pennies on the dollar—or, ideally, to leave empty-handed.

Important: Asset protection isn’t about “hiding money” from the world—quite the opposite, in fact. You want anyone who might come after your assets to clearly see what you have done to build a wall around your wealth. Why? It shows them the difficult legal path they’d have to take to get at that wealth—which, hopefully, will cause them to settle, negotiate or (ideally) throw up their hands and walk away. 

 

The good news is that the threats to your wealth from other people and entities may be on your radar screen. Take successful business owners, for example. More than 85 percent of successful business owners say they are concerned about becoming the object of unjust lawsuits or being victimized in divorce proceedings. The bad news: Only about a quarter (27.5 percent) of them actually have a formal asset protection plan in place (see the exhibit at right). The percentage is even lower among those business owners who say they are concerned about protecting assets. Given the risks that our litigious culture presents, these numbers are likely far too low. 

 

FOUR ASSET PROTECTION ACTION STEPS TO CONSIDER 

If you’re among the many types of successful people out there who lack an asset protection plan—or if you’re simply curious whether your existing plan is still as strong as it needs to be—consider taking a few key actions. 

1. Get protected before a claim against you is made. You can do a lot to protect your wealth before a liability arises—but thanks to a concept known as “fraudulent conveyance,” very little can be done after. As with insurance, the time to have asset protection in place is well before you need it—or even think you might need it. 

2. Cover the basics. Evaluate your liability insurance and other related policies and maximize them as best you can. Probably the fastest, easiest and cheapest move you can make is to take out a large umbrella policy to safeguard assets. Another simple but powerful strategy is to place your assets in someone else’s name, such as your spouse’s. If you’re sued, those spouse-controlled assets are often untouchable. 

Pro tip: Be sure you have a great deal of trust in your spouse and your marriage before transferring ownership of assets to him or her. In a divorce, your spouse could potentially walk away with those assets—or you could be forced to fight for them at least as hard as you’d fight a creditor who went after them. 

3. Consider a variety of other asset protection strategies. The asset protection strategies you may need will depend on your specific situation, of course. That said, it’s generally a good idea to consider your options, which might include: 

Ascertain appropriate utilization of risk transfer through property-casualty insurance (homeowner’s, auto, rental, personal excess liability [umbrella], health, disability, life, long-term care, directors’ liability and professional liability insurances). 

Consider various forms of ownership that either put assets beyond the reach of a creditor or make these assets less desirable for creditors. 

Discuss gifting assets when there are no current creditor issues in order to lessen the likelihood of raising fraudulent transfer issues. 

Structure any expected gifts and/or inheritances to protect them from claims of creditors. 

4. Be sure your attorney or other professionals are qualified to help you protect your assets. We see that far too many financial professionals aren’t in a position to provide guidance on and implementation of many asset protection solutions. Assess the asset protection expertise among your professionals—either the expertise they possess themselves or the resources they have access to via their professional networks of other experts. 

CONCLUSION 

You can’t necessarily stop someone from suing you. But you can take steps that will make it harder for litigants to collect money from you unjustly—and maybe even prevent those litigants from coming after you in the first place. 

When you think about how hard you’ve worked to grow your assets, we think you’ll agree that it makes sense to put strategies in place to protect them too. 

Fidato Wealth LLC is a Registered Investment Adviser. This brochure is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Fidato Wealth LLC and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Fidato Wealth LLC unless a client service agreement is in place. Copyright 2018 by AES Nation, LLC. If you are not the intended recipient, or the employee or agent responsible for delivering the message to the intended recipient, you are notified that any review, copying, distribution or use of this transmission is strictly prohibited. If you have received this transmission in error, please (i) notify the sender immediately by e-mail or by telephone and (ii) destroy all copies of this message. Please note that trading instructions through email, fax or voicemail will not be taken, as your identity and timely retrieval of instructions cannot be guaranteed.  If you do not wish to receive marketing emails from this sender, please send an email to sayhello@fidatowealth.com.

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Big Wealth Mistakes the Super Rich Don’t Make

 No one is perfect—not even the smartest or most famous among us. But some people veer closer to perfection than others. 

Take the self-made Super Rich—a group we define as those with a net worth of $500 million or more that they earned through efforts such as starting a business. These extremely wealthy individuals aren’t immune to making mistakes with their wealth. But we find that they do tend to avoid certain crucial errors that might otherwise impact their bottom lines and financial futures. What’s more, these are the same mistakes that can trip up investors and families at just about any level of wealth. 

The message: Sidestepping errors consistently can be just as important as making a lot of winning moves. You can potentially help yourself and your bottom line by learning what the Super Rich don’t do with their wealth! 

With that in mind, here are three of the biggest financial blunders that the Super Rich make a point to watch out for so they can avoid them. 

1. Losing sight of goals 

The Super Rich are generally very skilled at developing and spelling out their goals and even determining their deeper philosophies and beliefs about wealth and values. They might, for example, craft a family vision statement about the family’s optimal outcomes and the reasons (both practical and psychological) for wanting them. Then they create a mission statement and a plan with the steps to take to realize that mission. 

From there, all decisions about wealth are made only after considering the family’s vision, values and action plan. Any moves or changes should reflect those underlying factors. By having systems in place to never lose sight of their key goals and the factors underlying those goals, the Super Rich do a superior job of not chasing hot investments or “opportunities” that don’t amount to anything. 

That doesn’t mean the Super Rich are rigid and inflexible when it comes to their wealth planning. When goals change significantly enough, they make adjustments. 

The big lesson: Be very clear about what you want to accomplish. While it is important to be flexible, any decision to make adjustments or large shifts in strategy should be deliberate and carefully considered. Likewise, your decisions should certainly not be the result of a lack of guidelines for making smart decisions or because you’ve discovered a “shiny and new” investment product that has nothing to do with your financial goals, values and philosophy. 

2. Working with professionals who are subpar—or worse! 

The Super Rich know better than most that there are far too many “professionals” who are actually pretenders (who have good intentions but lack necessary skills), predators (who want to steal from them), or exploiters (who promote overly aggressive solutions). 

That’s why they take specific steps to help confirm they are working with consummate professionals: 

Look for leading authorities. The objective is to work with recognized experts—such as industry thought leaders. 

Rely on referrals. The most consistently effective method is to garner referrals from high-quality professionals they are currently engaging. 

Pay for quality. While the Super Rich make a concerted effort to minimize costs, as we all do, they don’t forgo desired results simply because pursuing those results might require them to spend some money. 

The big lesson: By turning to leading authorities—thought leaders—and soliciting referrals from high-caliber professionals you already know and trust, you can potentially greatly increase your chances of working with truly skilled professionals. 

3. Failing to get second opinions and do stress tests. 

Remember “Trust, but verify”—the phrase made famous by Ronald Reagan when talking about the Soviet Union? The Super Rich take that message to heart. They are fully aware that even the top professionals they tend to hire can make mistakes. They also know that changes in their lives or the world at large can impact how a solution they have in place will behave. 

Therefore, the Super Rich rely on second opinions and stress testing. 

Ideally, a second opinion occurs before action is taken. Example: Say you’re considering a particular tax mitigation strategy. You might get a second opinion from another noted leading tax authority to be certain about the validity and viability of the strategy. Second opinions are commonly sought whenever there is any question or any sense of uncertainty, but really, they can be done at any time. 

Stress testing is typically done when the Super Rich want to evaluate an existing strategy that’s already in place. It is a check to see whether what they implemented in the past remains (and is likely to continue to remain) both viable and valid, that things are working as predicted. Stress testing is like an annual medical checkup. There may not be anything wrong, but it is a very good way to catch a problem before that problem becomes severe. 

The big lesson: No matter your level of wealth, getting a second opinion when you are unsure or uncomfortable about a strategy or idea or product is usually worthwhile. Similarly, periodically stress testing your overall wealth plan or aspects of it can enable you to avoid problems now or down the road. 

ADOPT BEST PRACTICES 

By and large, the self-made Super Rich have proven that they know what to do—and what not to do—in order to create, grow and maintain sizable wealth. By avoiding major slipups on your own path to wealth creation, you can potentially encounter fewer financial potholes along the way. 

Fidato Wealth LLC is a Registered Investment Adviser. This brochure is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Fidato Wealth LLC and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Fidato Wealth LLC unless a client service agreement is in place. Copyright 2018 by AES Nation, LLC. If you are not the intended recipient, or the employee or agent responsible for delivering the message to the intended recipient, you are notified that any review, copying, distribution or use of this transmission is strictly prohibited. If you have received this transmission in error, please (i) notify the sender immediately by e-mail or by telephone and (ii) destroy all copies of this message. Please note that trading instructions through email, fax or voicemail will not be taken, as your identity and timely retrieval of instructions cannot be guaranteed.  If you do not wish to receive marketing emails from this sender, please send an email to sayhello@fidatowealth.com.

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Working With the Right Advisor

 These days, too many successful, wealthy individuals and families are simply not getting the advice that’s most appropriate to help them achieve their key financial goals. 

There are a number of reasons for this. But one main culprit is that, overall, there are a relatively small number of financial advisors we would describe as extremely talented and deeply caring professionals. 

So, it’s a good time to ask yourself: How good is the financial advice I’m getting these days? 

FOUR TYPES OF ADVISORS 

To make smart decisions about your wealth, you want to be sure you’re working with true experts. That means professionals who are both committed to your well-being and best interests, and extremely technically capable in investments and advanced planning. These are advisors we call consummate professionals. 

Unfortunately, there are three other types of advisors operating today—and we strongly suggest you steer clear of them! 

Pretenders want to do a very good job. They have great intentions. The problem: They lack the knowledge and capabilities to do so. Pretenders simply aren’t familiar with many of the more advanced and sophisticated wealth-building and wealth-protecting solutions you may need to pursue your goals. Advisors who are Pretenders are not bad people. To the contrary, they tend to be intelligent, hardworking and well-meaning. They want to do what is best for their clients, but from an objective vantage point, they are just not capable. Their earnest hard work does not change the fact that a great many of them probably are not able to provide you with the high-level, sophisticated tools, strategies and products that are almost always necessary to become meaningfully wealthier, and they probably aren’t adept at the strategies that are so critical to protecting your wealth. 

Exploiters are often technically adept—highly skilled in advanced financial strategies. The problem: The financial and legal strategies they often turn to are technically legal—but highly questionable. Thus, there is often a good possibility that the strategies they advocate will blow up on you—often years after you’ve taken their advice. Put simply, Exploiters are not looking out for your best interests. 

Predators are criminals. Their objective is to separate you from your wealth using cunning, guile and duplicity. Predators may or may not be technically sophisticated. However, they’re superbly capable of being manipulative and building rapport and trust. 

The key differences among the four types of professionals are summarized in this chart. 

KEY DIFFERENCES 

Clearly, you want a consummate professional on your side—and there are a few steps to help you gain greater confidence that you are working with one. 

The way that most of the affluent and the accomplished find exceptional financial advisors is via introductions from professionals they work with. Example: If you need an exceptional money manager, your accountant may know trusted experts he or she can introduce you to. Or if you have an estate tax issue for which life insurance is the best solution, your trusts and estates lawyer likely knows leading life insurance agents. 

Going to professionals who have proven themselves to you can be a very powerful way to find other consummate professionals. When accountants or lawyers refer you to a financial advisor, they are putting their reputation and professional judgment on the line. This is not something they are likely to do unless they feel the financial advisor is a consummate professional. 

Another consideration is whether the financial advisor is a thought leader. That is, he or she is recognized as a leading authority by other professionals, the wealthy and successful, and even competitors. By identifying true thought leaders, you increase the likelihood of working with some of the most erudite professionals in their fields. 

NEXT STEPS 

Are you working with a consummate professional today? We hope so. If your advisor focuses on aligning your wealth with your key financial values and goals—and does so with the help of advanced solutions and a team of experts—it’s likely that you are! 

One of the best ways to deal with a situation where you’re just “not completely sure” or you “feel a little uncertain” is to conduct a stress test. This is a process of critically evaluating key aspects of your current financial situation and how they are being managed. Or it may involve carefully assessing a particular strategy or product you are considering and “putting it through its paces” before deciding whether to move ahead. 

Stress testing gives you the opportunity to correct mistakes or use solutions and products that can do a lot more to help you accomplish your goals. Simply put, stress testing often makes a lot of sense if you want to avoid financial advisors who are Pretenders, Predators or Exploiters. 

Fidato Wealth LLC is a Registered Investment Adviser. This brochure is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Fidato Wealth LLC and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Fidato Wealth LLC unless a client service agreement is in place. Copyright 2018 by AES Nation, LLC. If you are not the intended recipient, or the employee or agent responsible for delivering the message to the intended recipient, you are notified that any review, copying, distribution or use of this transmission is strictly prohibited. If you have received this transmission in error, please (i) notify the sender immediately by e-mail or by telephone and (ii) destroy all copies of this message. Please note that trading instructions through email, fax or voicemail will not be taken, as your identity and timely retrieval of instructions cannot be guaranteed.  If you do not wish to receive marketing emails from this sender, please send an email to sayhello@fidatowealth.com.

DOWNLOAD A PDF VERSION OF THIS ARTICLE HERE

Fidato Wealth Announces Two-Night Retirement Planning Course

To further their commitment to provide objective financial education to Northeast Ohio area residents, Fidato Wealth, an independently owned and operated fiduciary financial advisory firm located in Middleburg Heights, announced a continuing education course, scheduled to begin later this month. The interactive session, titled Retirement Planning Today®, will be taught over two nights, with sessions at Strongsville at Ehrnfelt Recreation and Senior Center on Tuesday, March 1 and March 8 from 6:00 p.m. to 8:00 p.m. Fidato Wealth founder and CEO, Tony D’Amico, CFP®, will lead the two-part course, which is sponsored by Lorain County Community College’s Center for LifeLong Learning.

5 Ways Advisors Can Team Up With Estate Planners

Clients often have complex estate planning needs that go behind a financial advisor’s expertise. That’s why some advisors are teaming up with estate planning experts to improve the level of service. “Our goal is to provide comprehensive, trusted, ongoing wealth management to our clients and part of that means that we refer them to outside professionals in areas of financial planning that are not our expertise to ensure their needs are being properly addressed,” in “5 Ways Advisors Can Team Up With Estate Planners” in Barron’s. Beyers is a senior wealth advisor at Fidato Wealth, who works closely with estate planning attorneys to meet their clients’ needs.