Financial advisors can plan every aspect of your economic life. Here’s what we believe high-net-worth investors should consider when choosing wealth management firms.
Financial advisors do more than just invest your money. Their counsel — in theory — should extend to planning every aspect of your financial life. Not everyone is ready to entrust their money to someone else, but it’s an option that we believe high net worth investors should explore.
For those interested in assistance, figuring out how to choose a wealth manager or even how to choose a wealth management firm can be convoluted. Wealth management firms are everywhere, and they might all seem the same to many Americans. That’s why it’s imperative, especially for high net worth investors, to treat choosing a wealth manager like any other important search.
Build a list of questions to ask potential wealth managers that assesses how well they would address your needs. Think about the skills you need to hire; you might be looking for a financial planner, an estate planner, an investment manager, or perhaps somebody who can help you make decisions about a wide variety of investment and financial planning topics. Talk to people at a variety of firms, seek referrals from friends and family, and home in on someone with integrity.
By taking the time to get to know your advisor, you can build a trusting relationship — and wealth — that lasts.
Answering the Age-Old Question: Do I Need a Wealth Manager?
Knowing how to choose a wealth manager, or even whether you should, starts with knowing yourself.
High net worth individuals have different needs and priorities. High net worth individuals are different because they tend to have more experience with investing and managing finances. As such, they might be unwilling to let a professional take over, or they might insist on micromanaging the efforts of financial planners.
These individuals generally aren’t ready to work with a professional wealth management firm. If you tend to be indecisive or don’t have the time required to follow the markets and become a prudent investor, however, a financial advisor can provide customized guidance rooted in valuable experience. If you want your investment portfolio screened for social and environmental responsibility, a good financial advisor should be able to help you.
Wealth managers are also helpful as a sounding board and as somebody who can hold your hand when markets become more volatile. The worst thing you can do is sell at a market bottom and buy at a market top. Your wealth manager should be able to help you create a long-term investment plan and follow that plan — even when it’s difficult to do so.
Evaluating Your Situation to Determine if Wealth Management is Worth it
Your financial goals, risk tolerance, and needs are unique. You might be planning for retirement or the sale of a home or business. Perhaps you’re in the market for estate planning guidance or access to alternative investment vehicles such as private equity or real estate. The key to figuring out how to choose a wealth management firm is to determine your needs and go with the option best suited to address them.
The wealth management firm managing your money should be well-versed in your specific financial situation — or at least have immediate access to those who do. Financial planners don’t handle estate planning directly, for instance, but they should be able to make estate planning recommendations and refer you to an experienced attorney who can work with you. In addition to deep market expertise and a solid investment process, your wealth manager needs high-level knowledge of the tax ecosystem due to the effect tax exposure can have on accumulated wealth.
Your advisor should be a fiduciary who is legally required to act in your best interest as a client. A fiduciary’s stringent obligations reflect the serious nature of handling someone else’s wealth. These obligations are also reflective of the level of thought high net-worth investors should put into picking financial advisors who are most qualified to address their needs.
High net worth investors may benefit from working with smaller, more specialized firms that make them a priority. At large institutions, teams of advisors are often beholden to pervasive conflicts of interest and cross-selling agreements that could prevent them from always doing what’s best for you. Additionally, large institutions may not offer the same attention to high net worth individuals that they give to even wealthier clients, so you may not receive tailored, personalized service.
At a boutique firm, the services you need may be coordinated by a single person who can take a holistic and independent approach to your current finances with an eye toward possible future scenarios that could affect your money.
Choosing to Partner with a Wealth Management Firm
Interested in learning more about our experience working with high net worth families and individuals? Contact us to schedule a free financial assessment to determine whether Pekin Hardy Strauss Wealth Management is the firm that will lead you to your financial goals.
This article is prepared by Pekin Hardy Strauss, Inc. (“Pekin Hardy,” dba Pekin Hardy Strauss Wealth Management) for informational purposes only and is not intended as an offer or solicitation for business. The information and data in this article does not constitute legal, tax, accounting, investment, or other professional advice. The views expressed are those of the author(s) as of the date of publication of this article and are subject to change at any time due to changes in market or economic conditions. Pekin Hardy cannot assure that the strategies discussed herein will outperform any other investment strategy in the future.