Individuals with assets require a variety of financial services; the greater the assets the greater the complexity of services they require. Small business owners, for example, need expertise to manage their companies’ finances as well as grow and protect their personal wealth and accommodate their families’ wants and needs — investment advice, tax avoidance strategies, college education savings plans, retirement planning and various associated trusts, succession planning including such support as business valuation and buy-sell agreements, and the protection, planning and distribution of their estates with a variety of assets each to be addressed with a different type of financial service. Suffice it to say the range of required expertise is wide.
In virtually all cases, people — the clients, the entrepreneurs, a patriarch or matriarch — don’t know the kinds or how many kinds of expertise they need. They are most likely to turn to a financial professional for advice, but one advisor with one particular skill can’t possibly provide the scope of expertise they need, especially when the client is a small business owner or a high net worth individual. So what a lot of individuals wind up with is a potpourri of advisors — a stockbroker for investments, an accountant for taxes and an insurance salesman. But as capable as each might be, they labor under a distinct disadvantage that compromises their efforts — no one sees the whole picture, how needs and goals and challenges collide in that client’s financial kaleidoscope.
Advice can’t be effective if conceived in a vacuum. Nor will a loose network of individual advisors deliver advice from a broad, holistic perspective. It can’t be expected of them. How much commission would an insurance agent make by prescribing solutions that don’t include an insurance product?
Hence, in a variety of industries — healthcare as well as financial services — the talk is of assembling multidisciplinary teams (MDTs) to address clients’ holistic needs. “Bundling,” a term more common among purveyors of telecommunications services, is being recognized as the best way to address complex client requirements. In our case, the client benefits from comprehensive planning and execution by a coordinated team of financial advisors, each an expert in a particular discipline.
In fact, HBK — HBK CPAs and Consultants and HBKS Wealth Advisors — has been developed around the concept of gathering into the firm the many disparate types of expertise that clients with complex financial requirements need. And the organization is structured to encourage interaction among what today is hundreds of professionals.
We try not to talk of the client here as “my client,” because clients don’t belong to any individual advisor; they are the firm’s clients. We take a collaborative, team-based approach, working together to deliver whatever expertise or combination of expertise required to address a particular client objective or challenge.
As Life Happens
Unlike the silo-based referral model that has specialists working at arm’s-length with the client, an MDT operates at a higher level as a committed structure. That grows in importance to the client as the client’s needs and goals change.
The client’s situation and circumstance are dynamic, not static. As life happens, and unanticipated events inevitably occur, the client will require prompt and sometimes radically different direction. The HBK MDT, already well acquainted with the client’s matters, is able to respond just as quickly. The team is already intimately familiar with the client and has the breadth of expertise onboard to understand the nuances of a current event and bring to bear the appropriate solution.
The limitations of stringing independent advisors together are many and apparent. If the client “belongs” to a particular advisor, any referral brought in will be hesitant to step on toes, to contradict. In the loose network, the natural allegiance is not to the client, but to the referral source; the aim is to strengthen that relationship and generate more business opportunities.
At HBK, we huddle and debate. We identify the expert in a particular matter and get input from him or her. Then we consider the advice as it accommodates the client’s overall situation, the issues they face, their long-term as well as short-term objectives.
Avert Risk Through Diversification
What good is an investment portfolio that creates a gain erased by unforeseen tax obligations? What good is buy-sell insurance without an expert business valuation? What good is a tax return that doesn’t consider the client’s assets and use of those assets? Why would you create a retirement plan without input from a certified financial planner? Just like a globally diversified investment portfolio seeks to reduce risk through diversification, so an MDT provides the checks and balances to avert risk by addressing each aspect of the individual’s financial picture with targeted and collaborated expertise.
“By virtue of being in the habit of exercising the MDT concept, we’ve created a culture of communicating closely and referring to experts within the firm even on less complex client matters,” HBK Principal and Chairman of the HBK Tax Advisory Group, Jim Rosa, CPA, PFS added. “Maybe a client doesn’t require a team, per se, but he still benefits by working with a CPA who’s supported by an extensive network of experienced professionals in lots of distinct disciplines, in many industries.”
Life is three-dimensional; financial advice should be as well. More than avoiding the mistakes that come from myopic advice, MDTs deliver tangible benefits. For one, collaboration saves money and time. HBK team members are used to working together; it’s an extremely efficient mechanism. And the accompanying cross-education makes everyone better and more efficient in subsequent engagements. Interaction among team members enhances performance, refines skills, streamlines the process for not only more efficient but higher quality advice — all that expertise coordinated.