"Remember that you are looking not only for top expertise, but also for the right expertise."

Your Network of Experts

By John Bowen

Working with experts outside of your firm is a key component of successful wealth management. After all, you probably can't do everything yourself at the high level affluent investors demand—and even if you can, you don't have time to get it all done. But how will you find the experts—e.g., private client lawyers and insurance specialists—who are an ideal fit for you and your clients?

SEVEN STEPS

To choose the right professionals, follow these seven steps.

Step One: Assess your clients' wealth management needs. The services you offer—and thus the types of professionals you need for your network—should revolve around two things: what your affluent clients need today and what will be crucial to them in the future.

There are dozens of wealth management needs spread across four major categories: wealth enhancement, wealth transfer, asset protection and charitable gifting. Some of the most common include the following

• Estate plans. If any affluent clients' estate plans are five years old or older, you need a lawyer with trusts and estates expertise on your team.
• Life insurance issues. If your affluent clients' net worth has grown significantly since they bought policies, you may want to add a life insurance specialist to your network.
• Business transitions. You may need to add a valuation expert or investment banker if you have clients who plan to sell their businesses soon.
• Philanthropy. Your clients may have strong philanthropic ideas but limit themselves to informal "checkbook" donations. A trusts and estates lawyer, along with an income tax specialist, can be key resources for developing more formal giving programs.
• Concentrated stock concerns. A derivatives specialist can help diversify clients with high concentrations in a single stock.

Step 2: Create a list of candidates. Once you have a clear understanding of the expertise your clients require, make a list of professionals who can provide it. Often, a lawyer will be your top need. Lawyers are usually a good first contact when building your network, because they generally have their own extensive networks of professional specialists. Once you secure an attorney, you can tap into those relationships for further expertise.
Good sources for potential candidates include:

• Financial firms. Some of the outfits you already work with may offer the services and products you need. For example, some insurance companies have wealth transfer and philanthropy services.
• Referrals from advisors. Peers who work with high-net-worth investors may be able to help you locate the right expertise.
• Referrals from clients. Consider asking clients with whom you have close relationships to introduce you to their other professional advisors.
• Speakers and authors. Pay attention to individuals at conferences and in trade publications who demonstrate the expertise you're looking for.

Step 3: Rank your candidates. Rank each candidate on your list according to his or her potential to contribute to your network. First, check credibility. Do an Internet search on each one. Scrutinize their websites (or those of their firms). If they've been published, look up their articles or books. Check the credentials of lawyers on the Martindale-Hubbell online database (www.martindale.com) and those of CPAs on the online database at www.cpadirectory.com.

Remember that you are looking not only for top expertise, but also for the right expertise. If you serve wealthy physicians, for example, you don't need just any lawyer—you need an asset protection lawyer.

Step 4: Create profile questions. This step is the linchpin of your efforts. You'll want to create a professional profile of each candidate by uncovering their key characteristics. Here are the questions to ask:

• The person. Start by determining their histories. Ask them how they got into their profession. What designations do they have, and what other firms have they worked for? Also, assess how you might get along on a personal level.
• Areas of expertise. Ask about their primary and secondary areas of expertise. How do they stay on top of developments in their specialties? Have them give you examples of how they've solved client challenges using their expertise and knowledge.
• Practice goals and objectives. Ideal professionals for your network are driven to become more successful. Get at issues such as their roles at their firms. What are their goals, and where do they see their practices in five to 10 years?
• Practice management. You need to know how potential candidates manage their own practices before working together. Ask each professional to explain how he or she manages issues like employees, compensation and adding new partners. How does the firm set goals for itself, and how are those goals benchmarked? How is the candidate's typical workweek divided between client meetings, management duties and other responsibilities?
• Clients. Find out how candidates currently work with affluent clients. How many clients do they have, and how many new clients come aboard during a typical year? What systems are used to attract, sign and retain clients and provide exceptional service? Also, do they focus on any particular niche or type of affluent client?
• Financial advisors. What is their view on working with advisors, and what has been their experience in dealing with advisors in the past?
• Financial services and products. Assess the candidates' knowledge of (and comfort with) your specific wealth management offerings and how you use them to meet your clients' investment goals, estate planning and other objectives.
• Compensation. Compensation will be the economic glue that holds your network together. Discuss how each candidate is compensated and the various sources of revenue at his or her firm.
• Teamwork. A successful network requires all participants to work well together, making it crucial to determine if a candidate is a team player. Is the expert open to working with you on cases, even though the client will remain primarily yours?
• Professional contacts. One great way to build up your network is to leverage contacts from an existing member. Therefore, determine what each candidate might be able to bring to the table in terms of access to other outside experts you need.

Step 5: Meet with the candidates. Describe your process in working with your clients and your desire to meet additional client needs beyond investment consulting. Outline how you will bring together members of your strategic network to meet those needs. Then ask your profiling questions to gather the information you'll need to make a decision.

Step 6: Make your decision. Once you've met with the candidates, you'll be able to make a decision. In addition to specific expertise, you also need each professional to demonstrate three key qualities that are essential in running a network:

• Personal integrity. Each member of the network must bring a high standard of personal and professional integrity to the table.
• Professionalism. Each expert must handle every aspect of his or her work with a consistently high degree of professionalism—both within the network and with clients.
• Chemistry with advisor and the network. To work together effectively, there should be personal rapport (or the potential to build it) between you and the professional, and between the professional and other members of your network.

Step 7: Do a trial run. To make the final determination on whether a particular professional is right for your network, conduct a trial run. This doesn't have to be complicated. Simply present the professional with a client case and find out what kinds of ideas he or she has for solving particular challenges. Assuming that these ideas make sense, move ahead with presenting them to the client and then implementing them as appropriate. Throughout the process, you'll have ample opportunity to decide whether you would work with this professional on additional cases.

Clearly, the network-building process can be a long and involved one. But by carefully charting your course, you'll find yourself with a team that enables you to bring a lot more value to your clients—and build a world-class business.

Reprinted from: FINANCIAL PLANNING