The Role of Advisers in a Wealthy Family

Life can get more complicated when you have wealth. Finding ways to manage and grow the family wealth can be time consuming and complex. Finding ways to protect that wealth can also be harder. Wealthy families need advice.

Mark Haynes Daniell, in the book Strategy for the Wealthy Family: Seven Principles to Assure Riches to Riches Across Generations, suggests that each family has what he calls an ‘eco-system’. The eco-system includes an inner circle of trusted advisers, friends and family, but it also includes a network of advisers such as lawyers, accountants, tax advisers, trustees, religious advisers and so forth. How doe you find these advisers?

How to find advisers.

I have never found it easy to add new advisers. Daniell has a method, consisting of six steps, to get to an effective, efficient network of advisers.

Daniell’s six steps to finding and keeping advisers:

  • Keep your family’s vision and goals in mind when making a selection.
  • Decide what kinds of advisers are needed in your situation.
  • Determine what the role of each will be.
  • Make a list of candidates for each role and interview each.
  • Give each selected candidate a test piece of work to see if you and the adviser are both satisfied.
  • Keep an eye on your network and replace advisers as needed.

How to manage advisers.

To help manage your advisers, he suggests grouping them into a matrix with 4 quadrants.  Are the advisers there for the long term or short term and have they performed positively or negatively?

If they are long term advisers and you aren’t happy with them, Daniell suggests working with them to correct the behavior. If they are short term advisers, you might just want to replace them.

What is a long term adviser?

A long term adviser will be someone such as the trustee of your trust or your tax accountant. Someone who will be working closely with the family for years.

It is pretty easy to decide what kind of long term advisers you need, at least in my experience.

What is a short term adviser?

A short term adviser will be someone who is needed only once, or once in a while. Sometimes it is a bit more difficult to decide if you need certain types of short term advisers.

In this kind of case, you probably won’t have known that you need this type of short term adviser when planning your network, but your inner circle of advisers can suggest when you need other expertise.

Smaller wealth category families need fewer advisers.

Daniell divides wealthy families up into four categories, depending on how much money they have.

Obviously, if you are in one of the less wealthy categories, you will probably need fewer advisers and they are easier to manage.

Do you have long and short term advisers? What do you think of Daniell’s 6 steps to build your adviser network?


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