Why Your Financial Team Should Work Together

Many people have multiple professionals, from financial advisors to lawyers to tax advisors, on their financial teams. It is the job of these professionals to ensure that you have the best financial, legal and tax advice. But often they don’t work together or know what the others are doing. Because of this lack of communication, you could miss out on an important tax deduction, or it could cause problems for your estate.

“It’s important that all the professionals involved in your financial affairs are able to work together,” says William Taylor, vice president of financial planning at Northwestern Mutual. “That ensures you’re doing things like maximizing tax efficiencies and properly planning your financial affairs.”

This open communication among financial team members is particularly crucial for those who have considerable wealth, are in the middle of drafting a will or own a business, since their financial affairs are likely to be more complex.

WHY COMMUNICATION IS IMPORTANT

There are a number of reasons why it might be helpful for your financial team to communicate and why they might not be communicating well right now. The first problem is that the members of your team — which could include financial advisors or planners; estate, corporate, and tax lawyers; and accountants or tax advisors — likely work at different firms. That’s a good thing, according to Taylor.

“When you’re investing, you want to diversify your assets,” says Taylor. “The same is true for advisors. If all your advisors worked for the same firm, you wouldn’t have anybody on the outside to ensure that you’re getting good advice.”

But the fact that they’re not working in the same office means that important things can be overlooked. For example, if your financial advisor moves around your assets, it’s important that she tells your attorney in case changes are necessary to your will. Similarly, if your accountant doesn’t know your full financial picture, he might not be able to plan your taxes efficiently. When your professional advisors are sharing information, they can catch potential problems or opportunities that they might not have been able to see alone.

ENSURING COMMUNICATION

As the client, it’s often your responsibility to be the relay between members of your team. That means you should bring your taxes with you to your next meeting with your financial planner or give your accountant a draft copy of your will to look over. But you can also encourage them to reach out to each other.

“Typically, financial planners are the ones who take the lead in this,” said Taylor, “because they tend to know most of the facts of your situation. They know things like when you want to retire, how much money you make and your goals for leaving a legacy. They have the bigger picture.”

If your professionals aren’t currently communicating, you can encourage them to talk more by bringing them together in person, says Taylor. If your financial affairs are complex, he recommends inviting all the members of your team to lunch and introducing them to each other. If your financial affairs are relatively simple, you might just want to encourage them to share information.

As a client, you should also keep your financial team apprised of any changes in your life. Taylor suggests having an annual review with each professional so that you can update him or her on things like whether you’ve gotten married, had kids, moved or changed your retirement plans.

When your professional advisors are sharing information, they can catch potential problems or opportunities that they might not have been able to see alone.

WHEN COMMUNICATION IS CRITICAL

While communication is always important within your financial team, there are many reasons why it’s so critical when you own your own business or if you’re planning your estate. Both situations offer opportunities for collaboration that can save you a significant amount of money through tax efficiencies and prudent planning.

“If you have a business, that adds a whole other level of complexity to your financial life,” says Taylor. “You might want to take money out of the business when you retire, or you might want to leave your business to your kids. Or maybe you want to leave the business to one child and your life insurance policy to another. This makes financial, tax and estate planning more complex for you, and there are more opportunities for mistakes.”

When it comes to estate planning, there are similarly a lot of opportunities for coordination. “Estate planning seems simple,” says Taylor. “You have assets, and you want to give them to your family. But it gets complex. For example, if you have young children you want to provide for, you have a lot of options. Do you set up a trust? Do you buy life insurance? What you choose to do in your estate plan has implications on your taxes and your financial planning.”   

IT’S BETTER TO HAVE A TEAM IN YOUR CORNER

One of the benefits of having your financial team working together harmoniously is that they will find more efficiencies and opportunities to save you money as they become more collaborative. “Ideally, your advisors should all be working together toward a common end — your benefit,” says Taylor.

Knowing that will make you feel confident about your whole financial picture since you won’t have to worry that something important will be missed or that you’ll lose out on an opportunity to save money.

“People feel better when they see that all their advisors are talking,” says Taylor. “Sometimes it’s not the easiest thing to do, but it’s worth it.”