Q&A: How Do You Address Issues Outside Your Area of Expertise?

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There are many “10 Questions to Ask Your Financial Advisor” lists out there on the Internet. Although some of these questions may help some people discern which professional to sign up with, we prefer our ten questions as they cut to the heart of the matter. They have an obvious correct answer (“Yes”), an obvious incorrect answer (“No”), and any professional who tries to veil their answer behind marketing nuances without giving a clear yes or no can be counted as incorrect. Our ten questions should not be hard for an advisor to answer.

That being said, I enjoy answering every set of ten questions I find. I recently found a Christian version of 10 Questions to Ask Your Financial Advisor when I was reviewing (and recommending that you avoid) their misleading directory.

Here are their ten questions:

  1. What are your qualifications and background in financial planning?
  2. What services do you provide?
  3. How does your faith affect your investment philosophy/strategy and recommendations for clients?
  4. How are you paid?
  5. How much do you typically charge?
  6. What products do/don’t you put clients into?
  7. What is your average portfolio size and life stage?
  8. What resources do you have to address issues outside your area of expertise?
  9. How do you communicate with clients? How often?
  10. Will I work with anyone else in your office?

For each question that we have already answered elsewhere, I have included a link to our previously written article. The remaining five questions I am answering in this series.

The next one is:

What resources do you have to address issues outside your area of expertise?

We educate ourselves! At Marotta Wealth Management, we work to fulfill our fiduciary responsibility by dividing areas of expertise into specialties and allowing team members to expand their knowledge and competence as a specialist in that area. When a new task comes in which we haven’t done before, we challenge our closest specialist to learn and become an expert in it. We are likely one of the few wealth management firms where “research and development” is legitimately part of someone’s job description.

We have support staff specialists who are experts in subjects such as Tax Planning, Roth Conversions, Retirement Planning, and more. We have traders who specialize in Portfolio Management, rebalancing accounts, managing capital gains, and ensuring sufficient cash for client withdrawals. Beyond that, we also have an investment committee who is responsible for developing and reviewing our Asset Allocation design methodology, selecting and defining our asset classes, selecting and defining our sectors, determining a target weight and dynamic tilt for each sector, selecting which specific securities are on our Buy List, and reviewing overall performance of client accounts on a quarterly basis to assess for any strategic changes.

In addition to traders and specialists, we have advisors who specialize in being the primary point of contact for groups of clients. These advisors specialize in understanding the situation, values, and goals of the clients they serve. Then, they translate that understanding into which financial services we should offer and pull in the appropriate specialist to do the analysis.

The collaboration between advisors, specialists, and traders provides different perspectives on financial planning which enhance the service we offer to clients.

Many advising firms outsource or simply do not offer such an array of planning services. However, we have always challenged ourselves to do whatever our clients would do if they had our time and expertise. This is why our list of services is extensive and ever expanding. As clients request more of us, we grow to offer more for our clients.

That being said, there are cases we are not allowed to or are not qualified to give advice on the matter. In those cases, we will provide a referral to the appropriate professional and serve alongside in the role of advisor. Here are two examples of how that might work.

We are familiar with 1031 exchanges, a method of avoiding capital gains and depreciation recapture taxes on the sale of a property by rolling the proceeds of the sale into a similar type of investment within 180 days. We sometimes recommend this strategy to clients who hold highly appreciated rental investments. However, the Intermediary of a 1031 is a necessary legal buffer to the process, because if you receive any money before the exchange is completely finished, the tax-deferred treatment of gain is broken and all taxes become immediately due. Qualified Intermediaries are their own specific brand of professionals, not just due to the complexity of 1031 exchanges, but because you are not allowed to act as your own Intermediary, nor designate anybody else who has acted as your “agent” in the past two years, including real estate agents, investment brokers, accountants, attorneys, and employees.

This is an example where we both are not qualified (we do not know all the complexities of 1031 exchange law) and are not allowed (we are currently acting in a limited capacity as your agent) to be the professional who helps you through this process.

Then, we come alongside our clients as an advisor to help them through the process. We are familiar with 1031 exchanges, capital gains management, and our client’s specific tax plan, so we still have a lot to bring to the table to help the client work with the Intermediary through the process.

Another example is drafting estate plans. We are very familiar with estate law and provide the service of reading our client’s estate plans to assess the plan’s overall fit with the client’s long-term financial plan and whether the plan is properly implemented across known assets. We also help some clients discern what their estate planning objectives really are, brainstorming some basic implementation ideas to take to the estate attorney. Sometimes, we are the first ones to notice that a document needs an update or that the client’s wishes have changed since they last drafted their plan.

However, drafting estate documents is considered practicing law, and we do not currently have a lawyer on staff at Marotta Wealth Management. For this reason, we come alongside our clients as an advisor to help them through the process while referring them to an estate attorney.

We believe in comprehensive, integrated, and personal financial planning. We see ourselves as your primary care provider for finances and strive to become experts in every specialty that you need while accompanying you on any referral to another firm we need to make.

Photo by Kari Shea on Unsplash

Follow Megan Russell:

Chief Operating Officer, CFP®, APMA®

Megan Russell has worked with Marotta Wealth Management most of her life. She loves to find ways to make the complexities of financial planning accessible to everyone. She is the author of over 800 financial articles and is known for her expertise on tax planning.