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. Success—in investing, business, and 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 better contingency plans.

The good news is that you can implement a process into your financial life to resolve your issues better and arrive at your desired destination.

Six Steps That Build on Each Other 

We call this process the Virtuous Cycle because it’s a multi-step 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—deeply understand 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 will not likely be effective.

Of course, that deep understanding must include your financial situation and goals. But it also needs to go beyond that information to fit your financial values, interests, most important relationships, and other vital factors. The goal is to develop an extraordinarily 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.

2. Consultation with a professional support network. No one—not even the best financial professional—is expert enough in all areas of managing wealth to deliver the highest-quality advice across the board. Therefore, the best advisors realize that fact and 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 network members should be top authorities in highly specialized areas 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

3. Scenario thinking. With profiles created and a professional network, advisors can engage in scenario thinking with you. 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 giving up control over how the money is managed?”

·      “What if someone wants to take advantage of us when we’re older and not as mentally sharp?”

·      “What if someone falls in my building, hurts himself, and sues?”

·      “What if I want to expand my business to other countries and minimize the taxes I have to pay?”

The most viable courses of action are selected from the possible meaningful outcomes devised in this phase.

4. Framing the recommendations. 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 excellent 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 strokes or excruciating detail, depending on your preference—how the recommended solutions can enable you to achieve your agenda and any limitations of those solutions.

5. Implementation. Once you’ve chosen how you want to proceed, the plan is put into motion. Implementation—taking action—is typically very straightforward, and it should be. The hurdles have been identified, and the approaches to surmounting them have been specified. This doesn’t mean implementation is easy; it often demands much work. However, it should be something advisors, and their teams do exceptionally well.

6. Ongoing monitoring and refining. Laws change—and lives change. It’s wise to ensure that any wealth planning stays up to date with such changes and that the plan remains positioned to generate the results you want. Therefore, a significant aspect of the Virtuous Cycle approach is to continually monitor all changes that could impact your future success and modify the plan as required. Ongoing monitoring often involves periodic reviews and responses to essential changes and innovations.

The upshot: Wealth planning should continuously refine goals and needs and the strategies and tools to achieve them. The same should hold 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—you and the people most important to you lose.