The Benefits of Building an “Intentional Team” of Advisors

by Chris Cahill, J.D., CFP^®, CAP^®

It never ceases to amaze me how human nature continually gets in the way of smart decision making regarding wealth and finances. People hate change; that’s a fact. Sadly, this phenomenon is never more apparent than when starting out a new relationship with family.

Many clients collect a team of advisors around themselves over the years – I refer to this as an “Ad Hoc Team” (a stock broker that they went to college with, a brother-in-law who sells life insurance, a friend of a friend who does their trust and estate planning documents and a CPA that someone or other introduced them to years ago). I see this sort of thing time and again.

When I ask them how well the team works together they look at me with a confused stare, as if to say, “work together?”

When I press them on this, a couple of things become clear. Often times the advisors are working largely in isolation; rarely, if ever, speaking with one another.  They do not get together for regularly scheduled strategy and update meetings and they practically never all get in the same room with the clients. Nothing good can come from this sort of relationship.

One of the primary reasons for the failure to have this type of coordinated advisory meetings is the fear of running up a bill. This fee consciousness often comes from the client, but can also come from the advisors themselves. This often happens in situations where an hourly rate advisor (attorney, CPA, or other consultant) has a concern that they may be billing the clients too much already. If that’s the case, they may be reluctant to want to send another bill in fear of jeopardizing the overall relationship. Interestingly, however, I believe that most clients would happy pay for a productive meeting with their team members that resulted in clear actions with measurable results. In many instances, I have found that highly functioning teams will agree to reduce their typical fees for these advisory meetings to make the overall cost of the meeting more palatable for the clients.

The only thing that I can think of that is worse than the situation I outlined above where there is no coordination between the current advisory team is where a member of the Ad Hoc Team fancies himself/herself as the quarterback of the relationship and wants to curry favor with the clients by throwing the other advisors under the proverbial bus. In these situations, the clients can wind up with a group of advisors all acting in a somewhat mercenary way out of survival of the fittest mentality.

The importance of group advisor meetings became clear to me a number of years ago when I was working with a new family. I was hired to manage their investments and wealth and wanted to assemble the team of other advisors to get together with the clients so that we could all get to know one another and see how we could collaborate on behalf of the clients. Well, the idea was met with tremendous reluctance on the part of the clients and several of their advisors. (This was a family who was extremely private and had been working with the same group of advisors for decades.)

Thankfully, I was eventually able to get everyone in the same room and what we found out was rather alarming. Each team member was asked to bring a summary of their respective area of work: the attorney was asked to bring a summary of the estate planning documents; the CPA was asked to bring copies of the last couple years of tax returns; the life insurance provider was asked to bring a summary of existing coverages and point-in-time illustrations. During the course of the meeting, we all learned that the clients had purchased a series of large life insurance policies from the insurance agent without telling any of the other advisors. These policies went years back. The combined annual premiums were far in excess of $100,000.

The problem, of course, was that the CPA was not aware of the existence of the policies and had not been accounting for the annual gift tax filings. More disturbing, however, was that the annual gifts to the trust that held the policies (thankfully they had been placed into trust) greatly exceeded the family’s available annual exclusion gifts. As such, they had been unknowingly eating up the remainder of their lifetime exemption each year to the tune of nearly $80,000. Had we not had the advisor meeting, this situation may have continued on unabated for years. It doesn’t need to be this way.

I recently met with a husband and wife who have rather significant family wealth. During the course of our conversation it became clear to me that they had the classic Ad Hoc Team. I sensed that they were actually uncomfortable with certain aspects of their relationships (the fact that they were talking to me should have been a dead giveaway in retrospect, but there was something more there). So I continued to ask a series of questions about how their team operates, how often they speak together, how often they get together to coordinate their affairs, etc. You can guess their answers. Finally, I felt that I had to ask the following question:

“knowing what you do about the team of advisors that you are working with now, would you pick the same team to work with you if you were start over again?”

The answer was somewhat surprising.  They actually said, “No.” They admitted that if they could do it all over, they would be more deliberate with their selections in almost every instance. I think they knew that they had some personality conflicts going on and that there were some individuals who were not really great team players.  (Not what you want with the team of advisors that you are paying good money for.)

The answer, in my opinion, is to take a fresh look at the team from time to time. One of my favorite things to do is to help my clients build what I call an “Intentional Team.” The Intentional Team is one that is put together with purpose and a singular focus on getting not only the best candidates and firms to fill the positions at the table; but, more importantly, finding team members who actually want to work together. Ones that will put their egos aside for the good of the client and literally work together side by side and in conjunction with the other members of the team to drive the best end result for the clients.

One of the most important components of an “Intentional Team” is that the clients have to give their permission for each member of the team to speak freely and openly with the other members of the team and they have to authorize them to get together regularly without the client present to discuss what they are all working on. Thereafter, regular team meetings with the clients and all advisors are essential.