The document has four sections. Each section has a header. Each header names a category of finding. Under each header, there is a specific finding and a dollar figure. The tone is the same throughout: clinical, enumerated, no editorializing.
This is what a Coordination Audit looks like.
What it looks at
A Coordination Audit is not a performance review of your advisors. It does not evaluate whether your wealth manager is generating alpha or whether your CPA is billing you fairly. It looks at one thing: what is sitting in the space between your advisors that none of them can see from where they are standing.
That space has a reliable structure. It sits at four seams: between investment and tax, between insurance and investment, between estate and insurance, and between estate and investment. Each seam is a place where one advisor’s decision becomes another advisor’s assumption. When those decisions and assumptions fall out of alignment, the misalignment costs money. The audit finds and documents that misalignment.
Here is what one audit found.
Finding 1: Beneficiary Designations: Insurance-Estate Seam
The client amended their revocable trust three years ago to include a generation-skipping provision for the benefit of two grandchildren. The estate attorney drafted and executed the amendment.
The beneficiary designations on the client’s two life insurance policies were not updated after the amendment. Both policies named the client’s children directly, bypassing the trust entirely.
At the client’s death, the combined death benefit of $2.1 million would pass outside the trust structure, lose the generation-skipping protection the attorney had drafted, and trigger transfer-tax consequences the trust was specifically designed to prevent.
Estimated cost: $420,000 in transfer tax that the existing trust structure was designed to avoid.
The estate attorney drafted the right document. The insurance agent was not told about the amendment. Nobody checked.
Finding 2: Tax-Loss Harvest: Investment-Tax Seam
In October of the audit year, the client’s wealth manager harvested $12,000 in long-term losses from three positions in the taxable account. The harvest was properly executed.
The wealth manager sent a year-end tax summary to the client. The CPA received it in February, along with the other year-end documents.
Between October and February, the CPA had structured the sale of a commercial property the client owned. The property sale generated $47,000 in capital gain. The CPA did not know about the October loss harvest when structuring the sale. The wealth manager did not know about the planned property sale.
The CPA could have timed the property sale differently, or structured it as an installment, if they had known the harvest existed. The wealth manager could have adjusted the harvest amount if they had known the property sale was coming.
Estimated cost: $35,000 in tax on gains that could have been offset or deferred.
Finding 3: Insurance Assumptions in the Allocation: Investment-Insurance Seam
The client’s wealth manager had run an asset location analysis eighteen months before the audit. The analysis incorporated the cash-value whole life policy as a bond equivalent in the overall allocation, with the policy’s credited rate treated as a fixed-income return.
Ten months before the audit, the client’s insurance agent recommended a 1035 exchange, surrendering the whole life policy for a variable annuity. The exchange was completed. The insurance agent did not contact the wealth manager before recommending the exchange.
The wealth manager’s asset allocation was now materially different from what the analysis had modeled. The portfolio was over-weighted to equities relative to the client’s stated risk tolerance. The wealth manager discovered the change during an annual review, eighteen months after the analysis was run.
Estimated cost: $40,000 in reallocation costs and approximately 18 months of tax inefficiency.
Finding 4: Account Titling vs. Trust: Estate-Investment Seam
The client’s estate attorney had retitled all major brokerage accounts into the revocable trust during an estate review four years ago. That retitling was documented and confirmed.
Since that review, the client’s wealth manager had opened two additional accounts: a taxable brokerage account for a specific investment strategy and a joint account with the client’s spouse. Both were opened in the client’s individual name, not in the trust.
The accounts had grown to a combined value of $1.4 million. Both would pass through probate at the client’s death rather than through the trust, creating a delay, a public record, and potential exposure to creditors.
Estimated cost: $42,000 in probate fees at a minimum, plus 12 to 18 months before the assets are accessible to the estate.
The wealth manager opened the accounts correctly for the intended investment strategy. Nobody asked whether they should be titled to the trust.
The pattern
No advisor in any of these findings made an error within their own domain. The estate attorney drafted correct documents. The CPA structured the property sale correctly given the information they had. The insurance agent recommended a 1035 exchange that was appropriate for the policy in isolation. The wealth manager opened accounts appropriate for the intended investment strategy.
Every finding lives in the space between advisors, not inside any advisor’s work. The space between advisors is not anyone’s job. Until it is.
What the audit doesn’t tell you
The findings above are from one household. The categories they represent are the same found in most audits: beneficiary designations, tax-loss coordination, insurance-investment integration, and account titling. The specific findings differ. The dollar costs differ. Which categories have findings and which are clean varies every time.
The audit document tells you what is in the gaps of that specific household’s advisory structure. It does not tell you what is in yours.
That is the one question the document cannot answer.
