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This chapter is from the book

Strategic Wealth Management

Instead of the classically flawed approach I just described, this book focuses on a new way to structure your wealth management affairs. I call it "strategic wealth management." It’s not that the classic approach is wrong. It’s just incomplete. Like having a gun without a good aiming system, you’re unlikely to hit your target. In contrast to the classic approach, strategic wealth management is a holistic approach to wealth management that focuses on your interests. It explores all of your strategic options and puts you back in the driver’s seat while showing you how to employ your advisors to greatest effect. Your values, your skills and resources, and how you relate to your family are at the core of the strategic wealth management approach and are key elements of what I call the Strategic Wealth Management Framework".

For example:

Do you want to use your wealth to reflect your deeply held values and beliefs? The Strategic Wealth Management Framework can help you design a wealth management strategy that does this.

Do you or members of your family have competitive advantages that you can leverage in the marketplace to drive increased returns on your assets? The Framework can help you do that, too.

Are there family members or others to whom you wish to pass wealth, as well as the skills to manage it well? The Framework provides guidelines for doing that.

How much risk are you comfortable taking? The Strategic Wealth Management Framework can help you determine the level of investment risk that is most in keeping with your investment skills, interests, and temperament.

Are there simple, low-cost, highly effective wealth management techniques that you can use to great effect and with little hassle? Yes. I show them to you.

In Figure 1.2, you will see yourself at the center of the Strategic Wealth Management Framework. You are the heart of the Framework. Early on, using this framework requires more time and effort to implement than the classic approach to wealth management. But it is a more thoughtful, systematic approach designed to help you manage your wealth according to your personal and family goals, whether for your lifetime or, in some cases, for multiple generations of your family. If you follow this framework, you will also get better performance out of your advisors, and in many ways you will be a more attractive client to them.

In Figure 1.2, projecting left and right out from the core are two arrows labeled Context and Infrastructure. In order to set a coherent strategy and then execute it, you will need to evaluate the context within which you wish to operate and build an effective infrastructure to achieve your goals, based on the reality of that context.

Figure 1.2 Use the Strategic Wealth Management Framework© to create a fully integrated plan that meets your objectives.

The external context in wealth management includes the financial markets and the many institutions that operate within its confines, the tax code, and for those who have a multigenerational timeframe, estate planning law. For those with philanthropic interests, the external context also includes the non-profit sector. It is critical to the success of this model that you examine the external context early in the wealth management planning process. Only by understanding the context within which you must make decisions and the specifications for an effective infrastructure can you set appropriate financial objectives and organize the right advisors to execute your wealth management strategy.

The dynamism of today’s wealth management industry coupled with the complexity of family dynamics can make wealth management a difficult challenge. To help my family and my readers manage the process, I have devised the Eight Principles of Strategic Wealth Management to bring clarity and precision to our actions and activities within the Strategic Wealth Management Framework (see Chapter 2, "Eight Principles of Strategic Wealth Management"). I use these eight principles all the time. They are guideposts that keep me focused on the things that are most important. When decisions get complicated, the Eight Principles help me narrow my choices while maximizing the impact of those I make. They can do the same for you.

I know that the Strategic Wealth Management Framework and the Eight Principles of Strategic Wealth Management work because they have worked very well for my family and me. By using them

  • You’ll make sound wealth management decisions based on purposeful reflection, planning, and action.
  • You’ll select advisors whose skills and experience best match your financial objectives and wealth management strategy.
  • You’ll make sound investment decisions that are closely aligned with your investment skills, interests, and risk tolerance.

Finally, by embracing the Strategic Wealth Management Framework and the Eight Principles of Strategic Wealth Management, you’ll be able to project your values and ambitions (and those of your family) outward into the external environment to achieve specific and concrete wealth management goals—your wealth management goals. When your strategy is a success, you create a legacy that improves your satisfaction and significance and that benefits your family and society.

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