Wealth Protection as a Practice Strategy


While 55 percent of all respondents in a Merrill Edge survey fear running out of money (women, baby boomers and Gen Xers hover right at 60 percent), an even more astonishing 53 percent of current retirees fear the same fate (PNC Bank).

In its survey series, “State of Planning in America,” Northwestern Mutual found that financial health was approaching physical health (43 percent and 48 percent respectively) as the No. 1 priority for improvement; much greater than “time with family and friends” (31 percent), career (12 percent) and education (5 percent).

Wealth Manager as a Wealth Protector
Two wealth objectives are always present for any individual or institutional investor: wealth protection and wealth creation. While present together, the calculus underlying wealth management holds that wealth can’t be created until it is first protected.

These principles hold wealth protection as an outcome:

  • A dollar that is lost is really the loss of a compounded dollar.
  • Although the power of compounding accelerates wealth creation when values are rising, it diminishes wealth values at an increasing rate with losses.

These principles bring us to another truth—avoiding any loss of a dollar allows wealth to compound from a higher floor.

Wealth Manager as a Financial Health Practitioner
The FPA Research and Practice InstituteTM study, “The Future of Practice Management” published in December 2013 determined unequivocally the practice shift from financial planner, money manager, or investment planner to wealth manager. At the core, a wealth manager works across a tactical roadmap covering a wide set of services, and the momentum is increasing to add these services in the short term.


Loury_June 2014_1

Just as a general practitioner oversees a patient’s physical health and quarterbacks any treatment plan using specialists, so does the wealth manager function in an overseer capacity.

Wealth Protection Leads to a Large Practice Footprint
One of the great frustrations of a financial planner/investment manager is the finely tuned plan, and the tightly knitted investment program, suffer from commingling with market, economic, political and regulatory factors beyond direct control. In down markets, the client sees portfolio values declining and inevitably asks, “Is this plan really working?” Rising markets suggest another question: “Is the plan working, or is it just that these are favorable market conditions?”

Wealth management engages in tactics largely unaffected by external forces, allowing the wealth manager to point to specific wealth protection outcomes regardless of the market’s movement up or down. In all respects, the list below avoids the loss of dollars that otherwise diminish wealth creation (and protecting against these losses is freed from investment performance):

  • Setting spending and budget priorities
  • Reducing debt
  • Reducing income and capital gains taxes
  • Eliminating surrender charges and product fees
  • Maximizing Social Security income
  • Stabilizing retirement income
  • Avoiding required minimum distribution inefficiencies
  • Managing portfolio income tax exposures
  • Eliminating uninsured/underinsured property losses
  • Preventing attacks from creditors and potential litigants
  • Eliminating probate charges

Wealth Protection as a Marketing Platform
The market’s shortfall risk worries offer a ready megaphone to promote the wealth manager’s broad capabilities to both retail and wholesale channels.

Retail: The many ways a wealth manager can avoid losses presents solutions and valuable benefits to a client’s full need/anxiety/aspiration inventory. No longer is an adviser limited to discussions with only those prospects dissatisfied with investment performance or seeking new investment programs. Furthermore, the educational opportunities using the aforementioned wealth protection principles, as well as describing loss avoidance planning tactics, are rich seminar/content themes that draw a direct line from a client’s worries to solutions to benefits.

Wholesale: For the wealth manager to execute the comprehensive financial plan with its overarching loss avoidance program requires multidisciplinary specialists.

Specialist Required Execution Role
Trust and estate attorney ·   Trust documents
·   Funding trusts
CPA ·   Tax filings
Life insurance agent ·   Insurance policies
·   Annuities
Property and casualty agent ·   Fire, theft, natural disaster policies

Forming multidisciplinary teams to execute the plan opens up leveraged marketing opportunities with each multidisciplinary team member’s own client base (see the Journal of Financial Planning article, “Achieving Higher Growth with Multidisciplinary Teams”).

Business Strategy Leading to Practice Tactics
Wealth protection as a practice strategy not only forms a strong marketing foundation, but it delivers two valuable outcomes

  1. increasing the client’s wealth profile even to downstream generations, and
  2. moving a client from stress to peace and from fear to confidence.

Few professions can deliver such a robust benefit package nor claim such a high calling.

Kirk LouryKirk Loury
Wealth Planning Consulting Inc.
Princeton Junction, New Jersey



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