Choosing the right wealth adviser, strategy could save you millions.
Whether you've sold your business for $30 million,
inherited $6 million, are a senior executive at a corporation
with stock options worth millions, or you've accumulated your
wealth steadily over many years, there comes a time when you'll
want to enjoy your hard-earned money and make sure you preserve
your wealth for your family and your heirs.
Achieving all that is important to you will require
some major decisions. The most important wealth management decision
most people make is finding a trusted individual to turn to for
advice. Notice we didn't say finding a firm, because it is the
trust and relationship with an individual that really matters.
Take-aways
• Investment advisers focus on managing
money and investment returns.
• Financial advisers tend to be product
driven.
• Wealth managers work on a family's
entire financial vision. |
Although you may be happy with your current relationships,
if you can't articulate the differences between investment adviser,
financial adviser/planner and wealth manager, then you owe it
to your family to study up on the vast difference between advisers
to determine which type can assist you the best.We'll start with
the basic and end with the most comprehensive.
Investment adviser: For a set annual
percentage of your investments, an investment adviser will handle
your portfolio, buying and selling securities with a goal of increasing
returns and beating such benchmarks as the S&P 500 index.
The advantage of an investment adviser is he is
paid as a percentage of assets under management so his motivation
is to increase the value of clients' portfolios.
The disadvantage is that although he may meet you,
discuss your goals and act as an adviser, he is mainly focused
on managing money.
Financial adviser: This is probably
the best-known option since this category of advisers usually
handles anywhere from a few thousand dollars to a million or so
for their clients.
You may know these advisers as financial planners,
insurance agents or stock brokers. Some are independent and others
work for large banks or brokerage firms.
These advisers have traditionally been the place
to go for investors interested in buying and selling stocks, bonds
or mutual funds.
The advantage is that most of these advisers outsource
the money management task to investment advisers and help you
evaluate how your money is performing, and they'll spend time
discussing your goals and actually working to help you achieve
them. The disadvantage is that most are product driven. Most solutions
are formulated in terms of proprietary products.
Wealth manager: A wealth manager's
goal is to help you develop not just an investment portfolio,
but your family's financial vision. This vision will act as the
road map going forward.
Most wealth managers will guide you through a multistep,
structured and well-tested process. An interview with a wealth
manager might feel like a visit to a psychologist because your
deepest fears, wants and needs will probably be discussed.
You'll be asked many, very personal questions: Who
are your loved ones? How do you wish to have them taken care of?
Do any of them have special needs? They'll want to know what causes
or charities may be near and dear to your heart. What hobbies
and activities do you enjoy? Last but not least, they'll want
to understand what is genuinely important to you; what it means
to you to move from a life of success to one of significance.
They will help determine the challenges you face
in reaching your family's vision. Then they'll utilize and coordinate
legal, tax, investment and non-financial solutions that are appropriate
for you, to help achieve your unique vision.
A wealth manager can simplify your life by taking
the pressure off of you when it comes to financial issues. You
are the CEO of your family's vision, and a wealth manager's mission
is to do everything possible to help you achieve that vision.
Wealth managers coordinate the efforts of other
professionals on your team, such as your accountant, lawyers and
mergers and acquisitions advisers in order to develop a cohesive
strategy. This coordination alone may save you hundreds of thousands
or even millions of dollars.
A wealth manager will also provide a dynamic wealth
management plan that tracks progress towards your vision.
One of the tricky parts of finding a wealth manager
is that many advisers call themselves wealth managers, and on
the surface there is no way to tell who is and who isn't. This
column should help you recognize what type of adviser you're talking
with based on the conversation you are having.
Affluent business owners and families with a net
worth exceeding $3 million are typically the best candidates to
benefit from the services of a wealth manager.
With a little bit of knowledge and armed with the
right questions, you can now better judge the best type of adviser
for you. Knowing the difference is half the battle, ensuring that
you are with the right individual is the other half.
Christopher G. Snyder and Haitham "Hutch"
E. Ashoo are principals of Pillar Financial Services in Walnut
Creek. Contact them at 925-356-6780.
DOWNLOAD
A PDF VERSION »
|
