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Expert Insights for Smart Financial Planning

Manage Your Wealth Like a Sports Franchise

With “Strength in Numbers,” you can find a winning formula.

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The Golden State Warriors adopted the mantra "Strength in Numbers" during their recent historic run to the NBA Championship. If it sounds simple, it is. A team approach to any enterprise reaps benefits. The Warriors possess what those in the sporting world call a "deep bench", and because of it things worked out nicely for them.

During the championship series, it looked for a second like the best player on earth, LeBron James, was going to single handedly lead his team to the first championship trophy in Cleveland since 1964. The pivotal game four in Cleveland was the turning point. The Warriors blew LeBron & Co. off their home court. The Cavs looked as though they had run out of steam. The “Strength in Numbers” mantra rang loud in the Bay Area and was proof that a physically smaller, more cohesive unit of unselfish lethal shooters could win basketball’s ultimate prize.

The same principle applies in financial management. As long as you pick the right team and let each member fill their role, a deep bench pays dividends. If you assemble a top-tier team of advisers to assist you with different components of Wealth Management, your chances of success will dramatically increase.

I break down Wealth Management into the following “team” structure: Investment Management, Advanced Planning, and Relationship Management. The financial arena can be a complex world to navigate, but with “Strength in Numbers” (the right team in place) a winning formula can be attained.

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The structure of NBA teams includes the following: owner, president, general manager (GM), coaching staff and players. Think of yourself as the owner. You have the responsibility of hiring a GM, a trusted adviser who:

  • Chooses the right players (other advisers) to meet and optimize your specific financial objectives.
  • Makes sure that each adviser is optimizing your chances of success.
  • Facilitates and oversees your entire wealth plan, but also often assumes investment management responsibilities.

Ultimately, your net worth will drive the need for various teammates (advisory professionals), but things typically start with the deployment of a prudent investment strategy.

Investment Management is the astute management of investments over a specific time period to meet a specific objective. It requires an adviser who deeply understands your objectives, time horizons, risk tolerance, financial knowledge and experiences, biggest challenges, fears and passions and overall balance sheet. This information and more drives how your portfolio will be allocated across various asset classes, the main three being cash, bonds and equities. Investment Management also requires advisors to monitor both their clients’ portfolios and their financial lives so that they can adjust the investment plan if needed.

Your investment manager is usually the point guard directing the other players (advisers). Investments are just one part of the team’s strategy. Your overall financial success will ultimately be determined by your planning decisions; hence picking the right teammates is critical.

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Advanced Planning includes wealth protection (insurance), wealth efficiency (taxes and fees), wealth transfer (estate planning) and wealth giving (philanthropy). This introduces at least three other team members: a certified public accountant, an estate planning attorney and an insurance agent. If performance in any of these areas lags, your overall financial well-being could suffer.

To increase your chances of success, managing the various advisory relationships is essential, and the responsibility of your trusted adviser. The key is open communication and to foster solid and trusted relationships. Understanding each player’s unique role and area of expertise is important because many wealth management issues overlap.

It took the Golden State Warriors forty years before bringing the title back to the Bay Area. A long process that took many turns along they way. Wealth Management is similar. It is a process and things within your world, and the world at large, are constantly changing requiring the need for good communication, goal setting, discipline, trust and a well-conceived game plan.

A seasoned Wealth Management team will create value from good planning decisions. It will increase your long-term investment performance, ensure that you have a clear and simple estate plan, will identify the necessary levels of insurance coverage and reduce your tax burden, investment fees and insurance premiums. Ultimately, your independent and objective team could save you tens if not hundreds of thousands of dollars over time.

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Taking a comprehensive approach to achieving your financial goals requires wealth management. Choosing the right GM (trusted adviser) who builds a team of specialists driven towards one goal, your financial success, will afford you financial freedom and more time to enjoy your passions, just like it brought Golden State it’s first title in 40 years.

Woodring is founding partner of San Francisco Bay area Cypress Partners, a fee-only wealth consulting practice that provides personalized, comprehensive services that help retirees and busy professionals to enjoy life free of financial concern.

This article was written by and presents the views of our contributing expert, not the Kiplinger editorial staff.