Dan Dobry
Dan Dobry

Are you the Client or is your Money the Client?

As a financial planner, I believe this is the most critical question you need to ask yourself, and what REALLY sets certified financial planners apart from ‘distributors and product salespeople.

Unfortunately, for most distributors, the money is the client, and so their systems, methodologies, and procedures are all about classifying the investment (low, medium, and high risk, for example) and advice on the product. Their goal is to pinpoint the most suitable product, (is this possible?) but in doing this they miss the holistic approach. The “suitable product approach” does not create the value the families expect and also creates challenges when making other investment decisions. 

Hence, when the money is the client, the value for the owner is limited. 

Financial planners, on the other hand, are NOT in the “money industry”; They are in the “people business”. 

The Goal of a financial planner is not to help a client commit to purchasing a product, but to help families achieve their life goals. 

Defining life goals and implementing a plan for the family to achieve these goals is the calling of the financial planner. 

A good financial planner will not limit himself to providing advice within the limits of his regulated advice, he will take on all the challenges of the family globally. 

Every day, the family’s location in the world becomes less and less important. In the past, people lived in a region, and it made up their entire world. Today a person’s location no longer restricts him from experiencing the rest of the world. Our environment is constantly changing, due to the development of vehicles, ships, airplanes, etc. These inventions significantly affected human relations, travel, and the economy. Land phones, hand-held devices, computers, technologies, and most importantly, the internet, have made it possible for people to communicate with other people, who they wouldn’t have been able to communicate otherwise. With the help of computers, people can now acquire information from all around the world and smartphones have made the internet easily accessible.

The Information-Sharing Age

While the development of transportation, technology, the internet, and smartphones have made accessing information very easily, it has posed some difficulty to clients. These advancements are a threat to the group of people who make their money in a global society. We are indeed in a global society and the challenges we face in the financial world are many, understanding cross-border issues and being able to advise clients on platforms and assets in a global environment is becoming a skill that is essential for every financial planner. 

International Finance

These days, coordination among financial products such as retirement and inheritance products is prevalent. Professionals limited to local knowledge and experience (however broad) are not likely to supply significant value to clients. To provide significant value professionals need to obtain a wider range of expertise and work experience. They need to understand international trends relating and being able to identify domestic equivalents of financial products, for people who are arriving or departing the country.

Can International Knowledge benefit Your Business and Life?

Things to think about: 

Are you in the right jurisdiction? Where is your money sitting? In today’s world governments have to address and are addressing the issue of taxation on assets and freedom of movement of assets for assets that are placed in a jurisdiction that is not the domiciled home of the owner. 

Legislation in the European Union (EURBS) Britain (QROPS and QNUPS) and the US allow some freedom of movement of assets – these opportunities for clients can have significant economic outcomes for clients with assets in pension funds in the US, Europe, and Britain, for example, exemption from inheritance tax and more efficient tax planning on income from assets that can result in hundreds of thousands of Euro or Dollars in savings towards a better lifestyle or transferring assets to the next generation. 

Do you have a diversified asset allocation: The purpose of asset allocation is to achieve maximum returns with the lowest exposure to risk?  This is not an easy task in today’s environment. In the past we based the building of our portfolios on a risk-free core asset base, but does that exist anymore? If US government bonds are no longer risk-free then what is risk-free? The last free meal in the investment world is diversification. Diversifying assets over geographic regions, economic sectors, and non-correlated assets are essential as diversification means less overall exposure to risk. 

Have you considered Life Planning? If you don’t know where you are going – what is the chance that you will get there? Life planning means understanding assets and what the family wants to achieve with the assets. Money is never a goal, what money can buy is the goal. Mapping out life goals and matching assets to goals (understanding what returns are essential to living the life we dream of and then looking for investments that match best our needs) is starting a process of becoming the person you most want to be. 

Do you have access to global tax planning? Global tax planning belongs to ultra-high net worth individuals only. This is not true anymore. All ultra-high net worth individuals understand and highly values, global tax planning but this is essential for all of us. In a world where we alone are responsible for our futures, we accumulate significant assets and have to have a global view of our assets and our tax obligations. We have to look at this as fast as possible as good tax planning can double our tax-free assets available to live the life we dream of. 

About the Author
Dan Dobry was the founder of the Union of Financial Planners in Israel (UFPI), served as the first Chairman and President of UFPI. Dan was the Global Council Representative for Israel for the Global Community (FPSB) from 2012 - 2018 and from January 2019 is a member of the Committee for Standards and Qualifications for the European Union (SQC).
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