I co-founded a small retail financial planning practice 35 years ago, back before there were “financial planners.” After about 15 years, I got tired of hustling after investable assets to manage and knew there had to be a better way to help clients reach their goals. So, an attorney friend and I started a new firm whose sole purpose was to help other advisors with complex client situations that they couldn't solve on their own.
My friend Rod Zeeb, who founded The Heritage Institute, likes to remind people that you can be an expert in only 2 1/2 things. Fortunately, one of the few things I’ve always been good at is picking up the phone—that is, networking with people and collaborating with other experts.
Since Day 1, our firm’s business model has been based on collaboration with outside experts. Almost 100% of our business comes from outside attorneys, financial advisors and CPAs who bring us in to assist them with complex client cases. To make collaboration work, you must figure out how to work with the other professionals as amicably and efficiently as possible and get the client on board with your presence.
Collaborators often wonder how to introduce me to their clients. The answer: Just introduce me as “Randy,” and I’ll explain to their client that collaborating with other experts, who can each work on your behalf, is what I'm good at. I don’t pretend to know everything there is to know about advanced planning. But I can tap into the experts who do. “That’s why I want to bring in a team to help you with your situation.”
I've never had a client refuse this offer because they see they’re going to get a better outcome than if they had just relied on the longstanding advisor alone. And advisors like bringing us in to work with their clients because it makes them look bigger, smarter and better connected.
An advisor I’m working with has a $25 million net-worth-client (HNW) whom he’s been working with for about a decade. The client earns about $3 million a year and has a growing estate—but amazingly had no estate plan when I was brought in last year to help. Although the advisor and his client had become good friends over the years, the advisor had been managing only a few million dollars of the client’s money. Finally, he told his client: “It's time to get off the dime and put together a comprehensive estate and gift plan. I'm bringing in Randy and we're going to do this differently.”
As a first step, we assessed the client’s plan and projected what would happen (long term and short term) if he made no changes. I think he got the message because he engaged us further for a complete, comprehensive plan that included a number of our recommendations. After we presented the plan, the client reviewed it carefully and refined it. Ultimately, he agreed to move forward with implementation, and he now has much greater peace of mind.
To achieve this result, we didn’t do it alone. We consulted closely with the client’s attorney, CPA, two different valuation experts, an insurance specialist and several others.
Now the client’s estate plan is almost fully implemented. Even better, he’ll pay no estate tax on his burgeoning wealth. It’s been a 180-degree change. Results like these can be not only rewarding for advisors but also helpful for the family. In fact, the client has now asked us to host a family meeting with his grown children to explain to them what he’s done with us on his (and their) behalf.
Three Keys to Successful Collaboration
Some collaborations work seamlessly (like Rod’s and mine). Some collaborations are nothing more than a series of cooperations, and some collaborations are more like conflicts. Here are three keys to making collaboration go as smoothly as possible:
1. Check your ego at the door. We all want to be the top dog in the client relationship. But you have to know when to relinquish the wheel if another person on the team is more knowledgeable than you about a certain aspect of the client case. If you’re the type who has a hard time letting go, the collaboration model might not be right for you. Too bad your clients will miss out.
2. Establish a process from Day 1. Make it clear from the start what the team is going to tackle first and that you’re going to take things step by step, unless there's something on fire. Assure the team that you’ll get to everything on the agenda but reinforce that you’re going to do only one or two things at a time.
3. Maintain open communication. As a team, we must keep not only the client in the loop but also all the other key stakeholders. In the case of the HNW client mentioned earlier, we had conversations with the CFO of his family business, as well as the legal, accounting, insurance and valuation experts. With so many experts involved, you have to be really clear about the big picture goals and each person’s role. Otherwise, the outcome could be suboptimal.
How NOT to Collaborate
An advisor once introduced me to a client who had recently sold his business for $35 million. Not a bad payout. Further, the client planned to retain the real estate portion of his business so he could rent it back to his former company—a common tactic. However, he was looking at a huge tax hit. The advisor thought his client would be a perfect candidate for a charitable strategy, and that’s why he brought me in. We patiently explained to the business owner how a tax-advantaged charitable strategy could work to his advantage.
We spent hours doing calculations, computations and conversations for the client, and he seemed to be on board. As we got ready to sign the paperwork, the client suddenly exclaimed: “Well, I want to run this by my attorney and CPA.” The two advisors hadn’t been part of the original conversation—and hadn’t asked to be part of it.
Needless to say, it didn’t go over well when the client’s other advisors got involved. The client’s longtime attorney tried to nix the deal behind my back, and the CPA asked all sorts of crazy questions about appraisals. He warned us that the Internal Revenue Service was cracking down on charitable strategies like the one we were proposing and managed to scare the heck out of the client.
After lots of stressful negotiations and waffling, the client finally agreed to use our strategy, but it left me wondering why I had to feel like I had gone to war simply to help a client.
In hindsight, we should have done what I usually do in a team approach: get the client’s permission to talk to their attorney and accountant from Day 1—before presenting solutions to the client. That way, we have time to answer their questions patiently and defuse their objections before constructing the plan.
“Not Invented Here”
I realize you can’t always meet with a client’s most trusted advisors in advance—especially in this remote work era. Even if you do, you’ll often face resistance to your ideas because professional egos are in play, and everyone wants to be the top dog in the client relationship. A client’s longtime advisors can be threatened by solutions they didn’t come up with at their own firms—and nobody wants to look naïve or uninformed in front of their clients.
As Zeeb, quipped on a recent webinar with me: “If I'm the attorney, the only way I can justify my existence is to find a problem.” And that’s why even very wealthy people can be reluctant to engage their CPA and attorney ahead of time if they’re afraid of racking up a big bill. However, it's our job to remind clients that it's better to pay their attorney and CPA early on. Otherwise, they could be facing an even bigger bill down the road if the plan subsequently has to be undone.
For example: I was working on a complex case in California and needed the client to pledge collateral so she could purchase certain assets. After obtaining her financial statements and getting a good sense of her assets, we planned to use her account for collateral. As we got to the signing stage, lo and behold, her attorney and accountant piped up: “Sorry, that money’s already been pledged.” It would have been nice to have known that information upfront so we wouldn’t lose credibility with the client and the other advisors. It would have been a lot less expensive for the client.
Zeeb said he also likes to consult with the client’s longtime CPA, attorney and other advisors at the beginning of a case is because they often have great suggestions that wouldn’t have occurred to us on our own.
Many advisors want to build a moat around their clients. That’s natural. But in every circumstance I can think of, the more buy-in we have early on from the client’s longtime advisors, the better the case goes and the better the implementation is.
In my next article, I’ll talk about the eight key traits of high-performance teams and explain how to expand your referral network within HNW families.
For more about professional collaboration, listen to my recent podcast with Zeeb.