by Chris Bixby, CFP®, EA
Senior Vice President
Portfolio and Wealth Management
Wrapping up any tax year results in a flurry of activity. Not just holiday shopping and family gatherings, but also tax strategy implementation and estate planning actions. At Ferguson Wellman, we regularly provide guidance and field questions about appropriate strategies for our clients’ situations. As there is no “one size fits all” approach, it is important to consult with your team of financial professionals. This brings up an important question: Who is on your team?
The optimal team of financial professionals will consist of several individuals. Your portfolio manager and planning team are certainly central members. They will manage your investment strategy, evaluate how your wealth may evolve over time and identify planning strategies designed to achieve your goals. However, there are other professionals that should be a part of your team. At minimum, a tax preparer (typically a Certified Public Accountant or an Enrolled Agent), an estate planning attorney and an insurance agent should be included. Depending on your unique needs, you may have other specialized professionals such as a banker, family office advisor, or mortgage broker, just to name a few.
These individuals provide specialized advice and support implementation of strategies that help you achieve your goals. For example, a tax professional will help prepare your taxes and offer multi-year strategies for making estimated tax payments and evaluating the tax impact of any realization of income and/or capital gains, among other things. An estate planning attorney will recommend an appropriate structure for your estate plan as well as draft your wills, trusts, durable powers of attorney and other key estate documents to ensure your estate is carried out in accordance with your wishes. Your portfolio manager will work alongside those individuals to evaluate long-term planning strategies and ensure your portfolios are managed in alignment with your plans. For example, we will title your accounts per your legal documents, update beneficiary designations and monitor your portfolio income and realized gains to stay within your tax budget.
By having a team of advisors working together, you can ensure a smooth and comprehensive approach to your financial life. If desired, your portfolio manager and client relationship associate can act as the central hub for managing interactions with these various financial professionals.
In recent years, several companies have started to consolidate these roles into a single offering. They will have investment management, financial planning, tax preparation and estate document preparation all provided in-house. But is this a good idea? While there are certainly some benefits, primarily ease of communication, there are also potential drawbacks.
The first drawback is that finance, tax, and law are complex disciplines and specialist advisors are rarely found at the same firm. We have professional relationships with numerous tax, accounting and legal firms, each with their own areas of focus and specialization. Depending on the unique needs of each of our clients, we will refer to different firms that specialize in their area of need. In our experience, there is no single firm that can meet the needs of all our clients. It is unlikely that an in-house tax preparer or lawyer, or even an in-house team of such professionals, is the best fit for all clients at a particular investment firm.
The second drawback is that having one firm offer all the advice and implementation of your investment and wealth planning strategies does not provide the benefit of independent voices and varied perspectives. While a unified voice may be presented, you risk missing nuance and creativity and may suffer from a limited strategy outlook. Having the voices of several independent advisors presenting and evaluating the merits of various strategies makes for a stronger set of recommendations.
At Ferguson Wellman, we recognize the need to have a dedicated team of independent and highly competent advisors around you. Such a team will provide better service and thoughtful advice more likely to result in strategies that will help you achieve your personal financial goals.
Many of our clients already have a curated team of trusted advisors working well together. However, if you would like assistance identifying a professional for your team, please contact your portfolio manager.
Ferguson Wellman, Octavia Group and West Bearing do not provide tax, legal, insurance or medical advice. This material has been prepared for general educational and informational purposes only and not as a substitute for qualified counsel. We believe the information provided is from reliable sources but should not be assumed accurate or complete. You should consult qualified professionals to understand how this information may, or may not, apply specifically to you.