Chapter 6

Finding the Right Advisor

We didn't underperform.

You overexpected.

—Financial advisor to his client

Not so long ago, finding an overall financial advisor was like falling off a log: Most families engaged the local bank trust department. A few larger or more sophisticated families might wind up at one of the national trust banks—Bessemer, U.S. Trust, Northern Trust, Wilmington Trust. But that was about it. It wasn't until about 30 years ago that even the very largest American families began to migrate out of the trust department backwaters and into a world that resembled what today we would call an open-architecture approach to wealth management.

But what a change a generation or two can make! Today, the problem for families is not lack of choice, but too many choices. The traditional banks and trust companies are still around, though many are unrecognizably changed. Investment banks, insurance companies, and brokerage firms have gotten into the business of advising wealthy families. Larger money management firms have begun to target substantial families. And, of course, there are the various open-architecture competitors that have come along in the past 10 or 15 years.

Given the huge range of choices, the primary challenge for families is how to narrow the field down to a manageable group of finalists. To help families make sense of the complex world of financial advisors, I will walk through the important subject of open-architecture advice, talk in some depth about the fastest growing advisory platform (the so-called “outsourced chief investment officer” model) and then move into some specific advice for finding the right advisor for your family.