Last weekend, one of my Saturday morning tennis partners pulled up in a new BMW. As he deflected the teasing associated with a luxury-car purchase, I asked him about the cost.
His response — “With the one-time tax breaks, I got this $62,000 vehicle for $22,000 out-of-pocket.” — triggered a call to my accountant.
The accuracy of my tennis partner's tax information isn't my point; this is a perfect example of “word-of-mouth influence,” the predominant method that the affluent use to make major financial decisions. It should also be a wake-up call for all financial advisers, financial planners and certified public accountants.
As for me, I didn't need a new car, yet I was curious enough to call my CPA, but not my adviser.
Why? Who knows?
As a researcher and performance coach, I find myself staring at a window of opportunity for advisers that, if not capitalized on, will by default result in a “win” for CPAs.
Take the estate tax mess. If left unattended, affluent clients will be contacting their accountants instead of their advisers.
However, the issue has become so convoluted to many affluent investors that it has created a huge opportunity for advisers who have their eyes wide open. It is a perfect stage for playing the lead role in providing advice and guidance.
This goes far beyond simply pitching product.
Our research has allowed us to create a model of the “new-world adviser,” one who can oversee multidimensional aspects of a family's financial affairs. Your affluent clients want you to be on top of anything that might affect their financial future.
This doesn't mean that they expect you to be a tax expert; they expect you to understand the issues, their family's circumstances, and play a lead role in orchestrating a solution.
Here is a strategy that we have found to be effective: Call a CPA you trust and explain that you want to make certain that you are up to speed with your affluent clients regarding all the “fluid tax issues” that are swirling around.
Point out that you will be contacting your clients to discuss these issues to make sure that they are being addressed. If appropriate, you can offer to recommend the CPA's accounting services.
This is a good step even if you consider yourself very knowledgeable about the opportunities and pitfalls created by the uncertain tax environment.
As my CPA explained: “Tax planning is critical, but tax laws are changing every day. It's hard to plan, but you've got to be on top of it.”
In the above scenario regarding the BMW, I took it on myself to call my CPA. Yes, he had the answers I needed, but he wasn't proactive in making personal contact with me, which leads me to believe that he hasn't been in proactive contact with any of his clients about these matters.
To date, this hasn't been standard operating procedure for CPAs, as proactive service is not in their professional DNA. They are typically reactive and task-oriented.
This is a perfect example of why new-world advisers have trumped CPAs regarding possession of useful and timely information.
Alas, my adviser (whom I don't mean to throw under the bus because he is a new-world adviser) blew it on this one. He was no better than my CPA, as he had neglected to make contact with me regarding these impending tax issues.
Here is the opportunity for a triple win for advisers and planners who are on top of their game: First, as a true lifelong learner, you can demonstrate your knowledge of all this confusion simply by contacting each of your affluent clients and making them aware that you are on top of everything.
Second, you can then take the lead by suggesting that you both meet with your client's CPA for input on key tax issues. Remember, our research is clear on this point — clients want someone to be the quarterback of their team of outside experts.
Third, you have the opportunity to make a good professional impression with your client's CPA. As with clients, you can never make too many good impressions with CPAs.
A word of caution: When you are with your client and his or her CPA, be deferential and don't ask for referrals.
These meetings will offer an opportunity to strengthen your brand as a new-world adviser by positioning yourself as a knowledge worker overseeing the multidimensional aspects of your clients' financial affairs.
Matt Oechsli is an industry speaker, researcher and writer. E-mail him at matt@oechsli.com or visit oechsli.com.
