Excerpt from the Journal of Advanced Appraisal Studies

Mike Wyrostek a financial planner and appraiser from the Chicago area wrote an article about how financial planning and appraising can and should work together. He has been successful in blending the professions together and in making clients more aware of the value of their personal property.

Mike Wyrostek has been a professional financial and estate planner for over 20 years. President of Value in Valuables, Mike received his ISA status in 2006. Now, Mike blends his estate plans knowledge with his love of antiques and art to offer his clients a unique combination and blend of skills, called the S.T.A.K.E method.

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From Knowing About Other Assets

Let me show you the exact point where financial planning and appraising intersect.

One of the first tasks a financial planner performs is to conduct a detailed interview with the client. In fact, to open a new account, I check for what’s called “suitability.”

Suitability includes completing a detailed data sheet. Liquid assets (easily converted into cash like stocks) and illiquid assets (hard to convert into cash, like a home) plus liabilities get detailed on a form. The purpose is to arrive at the net worth of a client.

At the end of the asset list, there’s one line left to complete: Other Assets. (Note: You also see the other assets line on loan applications.) There’s just enough room on the form to enter antiques or art. But not much more. Certainly not the comprehensive information required for assets or liabilities.

That’s as far as it goes when it comes to probing these assets.

My point is, in the financial planning world, little or no focus is placed on other assets. So, this is where the professional appraiser can add tremendous value not only to the financial planner but their clients. Plus, Financial Planners tend to target the appraiser’s same market sweet spot.

Six factors influencing the financial planners market

In these volatile economic times, people need to know more than ever what they have. Not only do they need to know what they have, they need to know what it’s worth!

In addition, the sheer demographics of our population dictate the market approaches for financial planners. Here are six factors impacting financial planners now:

• Longer Life- As people live longer (Life expectancy in the United States went from 47 in 1900 to 78 in 2008.) we accumulate and collect more “stuff”. In fact, a study cited in the April issue of AARP suggested that 37 million identify themselves as collectors. The vast majority of them are over 50.
• Downsizing- 8,000 baby boomers will turn 62 every day for the next 17 years. As boomers age they may be considering downsizing into a smaller home. Some want to just start simplifying their lives by letting go of other assets. And others may want to convert assets into a liquid investment that can pay them monthly income.
• Value Added Services- To acquire and keep clients, FPs need to provide new and different value added services. As we know, most FPs do not concern themselves with the “other assets” their client may have.

But as business in the FP world becomes more competitive, you’re guaranteed to get the attention of forward thinking FPs with innovative ways to work their client’s assets.

• Fee Based Accounts- The trend with FPs is fee based accounts. This means an FP is paid a percent of the amount of financial assets under their control. The larger amount of assets the more they earn. So, FPs need to continually increase the assets under their management (e.g., convert antiques into cash/investments)
• Personal Asset Focus- Many financial planners have older clients. They’ve accumulated antiques and collections for many years and may have never given much thought to the value of these personal assets. They don’t realize these collections could have appreciated a great deal in value over the years - especially if these collections were accumulated in the 1950’s and 1960’s. It’s important that these assets be reviewed and appraised because they represent a vital portion of the complete FP process. This is where the true value of the professional appraiser lies for the financial planner profession.
• Part of the Investment Portfolio- Possessing art, antiques and collections as a part of an investment portfolio is becoming more and more common. I know we collect because we love and have a passion for it, but I believe there’s more. Many more people are conscious of the possible appreciation their collections might have over the years. This is one more reason why FPs need to include professionally appraised personal assets into the total financial planning picture.