Taking the time to seek appropriate advice, listen to it and implement it, it’s as simple as safely crossing the road – but why do so many people get it wrong?
We all know how to cross a road; it’s an essential skill we learn at an early age to avoid getting hit by the bus.
Now let’s imagine the bus is the tax authorities, the Regulator, or worse, criminal sanctions.
No one willing wants to get ‘hit’ by a huge tax bill, sanctions or court orders. No one wants a structure that doesn’t work, costs that spiral and ultimately something that has to be ‘operated’ on at additional time and expense to make it fit for purpose. So why do so many private clients simply run across the road without looking?
Some do look, but with only a cursory glance, and often only one way, and they therefore miss the bus that comes thundering in the opposite direction. Then it’s up to their administrators, legal and tax advisers to reach out and drag them back before the impact occurs, or in the worst cases, accompany them in the ambulance hoping that they can be revived. Now the painstaking and costly work begins. If only they had stopped, looked and listened.
Stop! Or more gently ‘pause’. It’s something we advise clients to do all the time. New projects are exciting and one can get carried away very easily, but that momentary pause can be a life saver.
So before you embark on the next house purchase, the company restructure or the yacht acquisition just take a breath. Then ‘look’ and seek the appropriate legal and tax advice (multi-jurisdictional assets call for advice in two or more locations) and finally ‘listen’, take heed of the advice and finally implement it. Then the project can safely proceed and the client walks calmly and safely across the road.
So if it’s so easy, why do so many people continue to get it wrong? There are many reasons but the most prominent are:
Some people try to do a lot of things themselves. They are often very driven, intelligent people and on the face of it, the administrative side of the work may not seem particularly complex. After all it’s frustrating to pay someone for something you can do yourself.
But we pay for other people to do things we can do ourselves all the time. We employ people to clean our homes and offices, to cook and deliver our food, we use a garage car wash when we could wash the vehicle at home. Paying someone for their advice, administrative services or the coordination of the project is no different.
Many clients do seek advice but often it is only partial or unfinished. This can be for a number of reasons.
The client issue – often a client doesn’t outline the full picture or provide details of their full structure. They are nervous to give so much information away to a third party, but some of the details they miss out may be crucial to their next transaction. Other times it is simply because they are trying to avoid huge bills for advice and think that limiting the sphere of what is advised on will mean a lower bill at the end. This can be a real falsehood.
The adviser issue – the service provider asks the initial questions but fails to extract everything needed. This may be because the client is unwilling to provide more, and after a few attempts the adviser gives up and thus has no idea that additional jurisdictional advice is needed as they only ever get a partial overview.
People with lots of money are often surrounded by a ‘flock’ of advisers, lawyers, tax advisers, concierge services, and what we may term ‘hangers on’.
It’s sometimes hard to separate the wheat from the chaff and this is especially true for some clients who have recently come into money, whether by inheritance or through the sale of a business. However, those used to having money for generations may also succumb to the pitfalls of having too many voices telling them what to do. With a cacophony of advice it’s often hard to work out what is good and what is bad.
In this instance, to cut through the chaos, use the road analogy. Stop and think about who these people are and what value they can add. What are they telling you to do? What measurable experience do they have? Do you really trust them to walk you across the road? Are the skills and the advice they provide really going to stop you from getting hit by the bus? The pause is invaluable when knowing when to listen to good advice and shut out the bad.
Don’t be afraid to cut out those of no value.
In the above scenario an individual manages to weed out the good from the bad but sometimes that can be hard, especially if that adviser has been in place for a long time. Just because John was your father’s trusted person doesn’t mean he is yours. Experience matters, and maybe John has some good ideas, but you also need some new blood. Adam knows his tech, and with multiple assets across the globe you need a better way of consolidating them all in one place than the traditional Excel spreadsheet. If both John and Adam are really good for you then they should be able to work together.
Be honest, be frank and don’t be afraid to fire those that aren’t good for you.
The above list isn’t exhaustive, but by highlighting these four general points it can make it easier to pinpoint what might be specific in you/your client’s case.
Streamline your team – have a main spokesperson – so you hear the one voice.
This ‘manager of managers’ can do all the leg work for you, get the team working on all the administration and accountancy matters, investments, legal and tax advice. Then they present it to you. Just as in a business the CEO doesn’t do all the work, he or she has a team working to their individual strengths and has clear reporting lines. Your life should be no different.
Choose wisely – make sure your trusted adviser is someone you trust implicitly- in fact you may on occasion tell them more than you would your spouse or partner. Make sure it’s an individual you can really count on.
Weed out those that add no value or sap your resources, both time and money. Don’t be afraid to say no.
Pause – above all take time to consider what you do and who you speak with. Pausing can sometimes be the biggest lifesaver of all.
Look out for Victoria’s next article on ‘What really is a trusted adviser and how to pick the right one?’