Spouses and taxes — the wealthy need advice on it all

The very rich have some specific needs
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Advisers to the wealthy often need to offer far more than guidance on how to make more money.

For the very rich this can involve planning the flow of riches through generations, a plan to avoid family disputes, avoiding loss of family fortunes to divorce from gold-diggers, or a strategy to avert the deleterious effects unearned inheritance can often have on descendants.

Over 90 per cent of the FT 400 Top Financial Advisers say they are dealing with clients who have more than $10m in investable assets, where such concerns are more likely to occur.

Handling the interests of the ultra-rich is not easy but such clients are highly sought after by advisers. Acquiring them in the first place is also not a simple task.

Many advisers succeed in securing their business because they have already met them or they are in their social circles, says Rajini Kodialam, co-founder and managing director at Focus Financial Partners.

Wealth management for the super rich is a complex task, concurs Raphael Amit, professor of entrepreneurship and management at the Wharton School, who leads the Wharton Global Family Alliance (WGFA).

Such investors will be looking for “a sophisticated and holistic approach,” he says.

“Wealth management . . . requires one to balance multiple goals, including preservation of financial capital, but also preservation of family heritages, culture, unity and harmony.”

Patrick Dwyer, who heads Dwyer & Associates, a practice based in Miami, concurs that servicing wealthy clients requires far more than knowledge of capital markets and investments.

The work of a financial adviser to the very rich is akin to that of a family counsellor, he argues. “You become a very important trusted adviser inside the family,” he says. “You are intimately involved with their family members, thinking about the issues that are more important than money.” As a starting point in this counselling role, he says advisers need to build an inventory of the client’s assets including businesses and property. Then they should ask what the client plans to achieve for the rest of his or her life.

Usually there are children and grandchildren involved in the plan, and Mr Dwyer says clients want to know how they can pass on their wealth in a way that will not “ruin their lives”.

Transfers include the use of a wider range of investment vehicles than those used by retail investors, such as trusts and partnerships.

It is during this part of the service that advisers work with clients to identify structures that protect assets from their children’s spouses, or that secure the most appropriate tax treatment, Mr Dwyer says.

“We have to be a lot more on our game [when dealing with wealthy clients],” says Mary Deatherage, a wealth adviser with Morgan Stanley based in Little Falls, New Jersey.

She says her work includes wealth transfer, estate planning, charitable donations and insurance. Ms Deatherage fell into the business thanks to her accounting background. As a certified public accountant, she says, “the complex stuff doesn’t scare me”.

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