Navigating the world of family wealth advisors can be daunting, particularly with so much at stake. To help you protect your assets and ensure financial success for generations to come, here’s what you need to know about spotting fake family wealth advisors and making informed decisions about whom to trust.
Family Wealth Advisors Have a CFWA Designation.
When selecting a family wealth advisor, it’s important to ensure that they have the qualifications and certifications necessary to manage wealth at this level. Ensure that your advisor has received a Certificate in Family Wealth Advising CFWA from the Family Firm Institute. The CFWA training includes:
Learning about the family enterprise, including how the family unit and business overlap and affect each other.
Systems Thinking for the Family Enterprise Advisor. This is a way of analyzing complex family dynamics.
Advising the Family Wealth System: A Multidisciplinary Approach. No one person can address all of the issues that affect an enterprising family. It requires a multidisciplinary approach.
Evidence-Based Advising: Using Research to Empower Family Enterprises. We read academic research and studies related to the field of family business and multi-generational wealthy families.
Ensuring that you are dealing with someone who has CFWA training and is dedicated to family wealth advising (as taught by the Family Firm Institute) will provide peace of mind. You will know that you are working with an individual who has a deep understanding of relevant knowledge — something that could be vital when making long-term decisions regarding your family’s wealth.
Family Wealth Advisors Are Not The Same As “Wealth Advisors.”
Fake family wealth advisors may simply be “wealth advisors” who put the word “family” in front. They may present a portfolio of fake or forged references and testimonials to appear more legitimate. Many of these scams are perpetrated by individuals who are counting on the fact that you won’t take the time to properly vet them. Don’t be afraid to ask for references from your potential advisor and verify any background information. If they are simply a financial planner or “wealth advisor,” ask them point blank why they are posing as a “family wealth advisor.” Ask questions about their methods, qualifications, processes, fees and other service provisions; reputable families look for multi-faceted guidance that best aligns with their lifestyle and financial goals.
Verify Education, Professional Experience and History.
Before making a decision, it’s essential to verify your family wealth advisor’s qualifications and experience. Ask for proof of their education as a family wealth advisor. Request a detailed history of the professional experience of your potential advisor; this is pertinent information when trying to ascertain their financial knowledge and skills. Don’t take any shortcuts – take the time to do due diligence!
Don’t Accept Promises of High Returns Without Risk.
Wealth advisors who are posing as “family wealth advisors” will sometimes promise high returns without any downside risk. After all, if they are lying about being a family wealth advisor, they are probably lying about other things. Even experienced financial advisors recommend caution when someone claims the ability to offer steady and consistent returns with no downside risk present. Remember that there is always some level of risk associated with investments, so be wary if your prospective advisor promises you only gains and no losses. Before you move forward, request accurate and detailed financial models from them to develop realistic financial goals and sound strategies.
Get All the Details in Writing Before Doing Business With Them.
Doing your due diligence is key to protecting your family’s wealth. Make sure to get all the details of any agreements in writing and read all the fine print before signing. Go over any contracts carefully and make sure you understand each clause and the exact services provided. As most fake advisors have a pattern of hiding information, be suspicious if they don’t seem willing to provide you with complete documents or answer questions you may have. Get all clarifications up front before you sign or put any money down on an agreement.
Decide If You Need an Actual Family Wealth Advisor.
If one of your goals is setting your family up for multi-generational success, then you need more than just a wealth management company that provides financial, legal and tax planning services. You also need more than traditional estate planning. Someone with a a Certificate in Family Wealth Advising (CFWA) will work with those other professionals. But the CFWA serves a different purpose. They help you with family dynamics, and to resolve disputes over money and business.
If your family has significant wealth, and you want to ensure that it stays in your family, then you need more than an investment advisor or “wealth advisor.” You need someone family with family dynamics, and who can work with your other advisors in a collaborative way.
If you want to find out more about what a real Family Wealth Advisor does, give us a call at 602-443-4888. Founding Attorney Paul Deloughery is a CFWA. He also wrote a book that you should check out. It’s called Lasting Wealth: A Revolutionary Approach to Family Wealth Transfer.