The importance of finding a financial teammate

Published 10:13 pm Thursday, March 20, 2014

By Mark U. McGahee

My father handled the family finances, PERIOD. When he died 26 years ago, my mother knew little about savings or investments.

Unfortunately her case is all too common. One person makes financial decisions, and spouses or children are left out of the process, so they neither know nor understand the mechanics and dynamics of the family’s investment portfolio.


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In families such as these, if the decision-maker dies or becomes incapacitated, the results can be financially devastating.

A family is essentially like a small business, and a competent small business owner has trusted relationships with professionals such as CPAs, attorneys, and financial planners/advisers. Should the business owner suffer from an incapacitating event, or die, company employees and family members of the owner know they can turn to these trusted professionals for guidance.

So, it follows that a family should establish a trusted relationship with a financial planner or adviser. If the primary person handling investment responsibilities in a family passes away, the family has a professional to turn to for help. This will be someone they already know and someone who knows them.

Credentialed advisers build their businesses on a fiduciary standard and often work on a fee basis. Other financial services industry representatives are primarily compensated by commissions linked to trades or product sales.

Financial representatives who are commission-based aren’t necessarily committed to a fiduciary standard. Generally, they only must satisfy what is known as a “suitability” standard.

This is no small difference. Financial advisers who abide by a fiduciary standard must ALWAYS act in a client’s best interest. Representatives operating under a mere suitability standard may recommend any financial product that is “suitable” for their client without regard to whether such a product is in the client’s best interest.

Character counts. The best financial advisers are those who have earned trust through their character and their competence. They get to know their clients in depth, so they know what issues may be concerning to some clients, but not so for others. Such knowledge is necessary to avoid roadblocks to wealth building and wealth retention.

You’re in it for the long haul. Recent market performance has resulted in investors building attractive portfolios, yet many investors do not have long-term wealth management strategies. Effective long-term strategies consider risk and tax consequences.

If you’re still working, then you are moving ever closer to retirement age. Someone only five years away from retirement should have different strategy than someone who is 25 years away.

You want a financial adviser you trust to help you plan and implement a risk and tax strategy that provides you with the best potential to have the retirement income you desire, yet it preserves your portfolio assets and your estate.

When you have a skilled financial adviser around to serve as your teammate for your portfolio, your family is better prepared if you happen to become incapacitated or die. The family can feel better knowing you have a professional whose service and guidance can be relied upon.

Don’t let the family’s financial knowledge disappear at your passing as my father did. A will or a trust may transfer assets, but neither transfer the understanding of how they were accumulated. The trusted financial adviser, serving as your teammate, may help to convey that know-how to others.

Mark McGahee is a financial planner and specializes in investment and protection planning at Nansemond River Financial Services. Email him at