Working with a wealth management firm can be an important part of ensuring a healthy and secure financial future for yourself and your family. But in such a crowded sector, how can you be sure you’re choosing the firm and the advisors that are right for you? Read on for a look at some essential steps to follow before you decide on a wealth management firm.
Understand what wealth management is all about.
The first step in choosing a wealth management firm to work with is making sure you have a clear understanding of exactly what wealth management is and what a wealth manager can do for you. While wealth management has no official definition, it’s generally understood as a top-tier, comprehensive approach to financial planning. Wealth managers look at your financial circumstances holistically, considering all aspects of your situation, and work to coordinate all of your financial planning and related needs, from managing the tax ramifications of business income to creating a donor-advised fund for your charitable contributions. Wealth managers will also liaise between you and other external experts, such as lawyers or accountants.
Determine whether wealth management is right for you.
Now that you know what wealth management is all about, the next step is to determine whether it’s the right choice for your financial situation. Contrary to what you might assume from the name, wealth management isn’t exclusively for the affluent. However, it’s important to understand that many wealth management firms do gear their services toward individuals or families who meet or exceed a certain financial threshold (for example, some firms may require clients to have account minimums of anywhere from $250,000 to $2 million or more). Similarly, most clients who work with wealth managers are already relatively experienced investors with a sizeable portfolio—in choosing to work with a wealth manager, they are not necessarily looking for specific investment advice but rather “big-picture” guidance about how to use their existing financial assets holistically to achieve their overall goals.
If the scope of wealth management—both in terms of services and client expectations—sounds like more than you really need, you may instead want to consider choosing a financial advisor or an asset manager instead of a wealth management firm. These professionals tend to work with clients from a variety of income levels, and they will be more focused on helping you answer specific financial questions or achieve particular financial goals. For example, if you need support managing your investment portfolio with the goal of making sure you’re ready to retire in 15 years, a financial advisor, rather than a wealth manager, would be better positioned to assist you.
Know what to look for in a wealth management firm.
If you do decide that your situation and your needs merit working with a wealth management firm, you need to know what to look for to make sure you choose the best firm for you. Some important points to consider when looking at your options include the following:
Products and services—Different wealth management firms will feature different kinds of products and services, so it’s helpful to get a sense of whether a particular firm’s suite of offerings will work for you. For example, if real estate has not previously been a key element of your portfolio or financial strategy, it likely won’t make sense to work with a wealth management firm that specializes in real estate investments. Similarly, it’s worthwhile to investigate the firm’s overall investment strategy to ensure that it is in alignment with your own goals.
Availability—Good communication between you and your wealth manager is absolutely essential. To ensure that you and the firm you’re considering are on the same page, it’s helpful to ask about how often managers typically meet with clients and what their preferred mode of communication is. This can give you peace of mind that you’ll always be able to reach your manager when necessary.
Track record—A thorough check of a wealth management firm’s track record, performance, and reputation is a mandatory step before deciding whether to become a client. Get to know the firm beyond the surface: ask to speak to current or previous clients, explore reviews and recommendations online, and look into any special recognition or awards the firm may have received. Remember, the future of your finances is on the line here, so don’t neglect this step.
Value—For many people, price is the most important consideration when it comes to choosing a wealth management firm. However, it’s a much better strategy to focus on value as opposed to price alone. Remember that price is what you pay, but value is what you get; therefore, cheaper is not necessarily better if there’s no value being offered. Look beyond the plain figures and instead focus on what’s behind them. Some firms may seem more expensive up-front, but it might be because they offer more comprehensive or personalized services than less costly competitors.