ESTATE TAXES
PROVIDED BY KEVEN PRATHER, CFBS
To Safeguard Your Wealth, Avoid the Exploiters
B
ack in the inaugural issue of the VFO Inner Circle Special Report, we showed you how to steer clear of two types of financial advisors who could erode your hard-earned wealth—or even destroy it.
1. Expertise. Pretenders have limited expertise but are often unaware of that fact. Also, Pretenders’ expertise is a function of the subject matter. A financial advisor can be very capable when it comes to money management, for example, but is not necessarily proficient at tax planning (although he or she doesn’t fully realize this).
• Exploiters are professionals who recommend aggressive variations of financial solutions and strategies that are legal — for now — but likely to blow up on you down the road.
1. Pretenders are advisors who do not serve their clients well due to incompetence, or who have good intentions but limited expertise. They may want to do a sensational job for their clients, but they are just not capable.
Predators may or may not be experts on a subject. They are pitching a very appealing and intriguing story—and that, many times, is enough.
• Anytime you’re presented with a financial strategy that seems overly aggressive or promises you the moon and stars, hit the brakes and dig deeper — you could be dealing with an Exploiter.
2. Predators engage in illegal behavior to cheat and swindle people. A whole range of Predators look to manipulate other people—particularly accomplished, affluent individuals and their families—by breaking the law.
In contrast, Exploiters tend to be very technically competent. They will regularly hang their legally untested solutions on nuances in the law. Often their grasp of the subject matter is exactly what they use to confound clients and even other professionals they work with.
• Be wary of excessively large fees associated with financial strategies — especially if the provider can’t break down the reasons behind those fees.
But there’s a third type of “professional” who is likely to be devastating to your personal wealth and emotional well-being: They are the Exploiters. The goal of Exploiters is to behave dishonorably, but not illegally, for their own satisfaction and gain. Unlike Predators, Exploiters do not break the law; their actions are technically within the bounds of current laws. But the aggressive solutions they advocate have a good chance of exploding down the road or generally not working out as promoted — and the
Exploiters are fully aware of that fact. Based on our experience, many of the top successful business owners know to be on the lookout for advisors seeking to exploit them in these ways — they know the warning signs, and they know to seek out a second opinion whenever those signs start flashing.
Here’s what these top entrepreneurs can teach you about avoiding the Exploiters.
FOUR KEY TRAITS OF PROFESSIONAL EXPLOITERS Let’s take a closer look at four ways Exploiters are different from Pretenders and Predators (see Exhibit 2).
2. Integrity. Pretenders intend to do what is best for their clients, but are in over their heads. Predators are criminals with no concern for clients, whom they view as marks and suckers. Exploiters have very little integrity and only some—but not much—concern for their clients. They are not willing to engage in illegal activities, but this is usually due to fearing the consequences and not because of any sense
EXHIBIT 2
HOW TO SPOT PRETENDERS, PREDATORS AND EXPLOITERS CHARACTERISTICS
PRETENDERS
PREDATORS
EXPLOITERS
Expertise
Limited
Across the spectrum
Often high
Integrity and concern for clients
Usually high
Nonexistent
Very low
Interpersonal skills
Across the spectrum
High
Across the spectrum
Legitimate solutions
To the very best of their knowledge
No
In the gray area, aggressive, pushing the envelope, or excessive
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HVACR BUSINESS MAY 2020
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