Q/A: Wealth Advisory

Q/A: Wealth Advisory

A Q&A with Charles Lowenhaupt, Lowenhaupt Global Advisors, LLC

Registered Investment Advisors (RIA) and Multi-Family Offices (MFO)

The Hard Questions

AR: Is the investment advisory business a
true profession with educational requirements, professional ethics, comprehensive testing, internship for those entering the profession and yearly continuing educational requirements (i.e. physicians, attorney, accountants, engineers, etc.)?

CAL: Certain practitioners in the wealth advisory business are licensed. They may be lawyers, accountants, nancial planners, architects and engineers and possibly others. The licensing and evolution of these professions do not focus
on the real capability needed to serve clients – a capacity to provide counsel and wisdom. Learning how to counsel requires understanding that the rst question has to be: “What do you want to accomplish; what is the wealth for.” Once the question is asked and the answer is evoked, then the wealth advisor must put on the “conceptual goggles” to take the clients purposes and values into strategies based on the advisor’s experience. The requirements set out for licensing may provide a framework in which the advisor can work (and does work as lawyer, accountant and so forth) but will not enforce the advisor’s capacity to give good advice.

AR: How important is it to be a duciary (required of an SEC registered investment advisor)? Without such professional standards how are registered reps and other non- duciary advisors able to remain successful?

CAL: Compliance with duciary standards can occur whether one is technically de ned as a duciary. In fact, that term is softening, so that many can become duciary. Don Trone has been studying this development and would argue that a different standard should be used to evaluate stewardship and leadership. In my career I have seen extraordinarily effective counselors who are not technical duciaries. In the 1960’s and 1970’s, there were many brokers who were loyal and good to their clients. The investment advisory business did not really start to evolve until the middle of the last century. The good wealth advisor acts generally as a duciary by putting the client’s interests rst. True uncon icted advice and objectivity however require more than duciary status.

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