Looking for a Local Wealth Manager? Here’s Why You Should Go Small
These days, it seems nearly every big bank, investment firm, and discount brokerage now offers wealth management as one of their services. Many of these big companies are also publicly traded.
But if you live anywhere in the San Francisco Bay area, from Napa to San Jose or somewhere in between, you’re about to learn why private wealth management companies can actually do far more than large and public ones to effectively serve high net worth and ultra-high net worth families.
Here are 10 reasons boutique private companies make stronger long term wealth management partners.
Table of Contents
Table of Contents
1. Wealth Management Is All We Do
Which company is more likely to be a “better steward of your wealth,” as Forbes puts it?
A company that offers wealth management as one of many services, where their primary business focuses on banking, lending, or money management? Or a company whose sole devotion is to the wealth management of their clients?
If wealth management is just one of many services offered by a large company, you can easily become an afterthought. You’re just a division on an org chart, one piece of the pie. Part of a department the company can decide to devote more resources to, or not.
At a private wealth management company, you are the business. You’re it. Your financial security and prosperity occupy the pre-eminent position in the minds of everyone at that company. You’re not just a customer. You’re known, individually. Were you to leave for any reason, they would feel the loss.
Again, as Forbes puts it, “true wealth management” isn’t just about what you earn each quarter, “but rather what you keep over the long term.” Private wealth managers partner with you for extended periods of your life. They will be walking with you through good times and bad, keeping your future financially secure, well-managed, and well-planned.
2. We Have a Culture You Can Align With
A private wealth manager will (most likely) take the time to understand your business, your personal goals, and your life ambitions. They should be deeply consumed with helping you achieve all your greatest dreams and aspirations.
That said, not all private wealth managers are the same, and you must take your time to evaluate if their culture aligns with your priorities. Your investment philosophy should reflect theirs. What you care about most in terms of money and investing should reflect their culture and investment philosophy.
When you meet with a wealth manager, you should interview them just as if you’re hiring a new employee. See 10 questions to ask your prospective wealth managers.
3. We Develop Customized Investment Plans
You want a wealth manager who customizes each investment plan to the individual. You do not want one who uses the same model for every client. Even having a few choices for different models to choose from, perhaps based on different levels of risk tolerance, does not serve you as effectively as a customized approach.
A customized investment plan gets built around your life situation, your financial assets, and your goals and lifestyle plans.
Where do you want to be in 20 years? What do you want your money to accomplish? How much do you want to give away, spend, and pass on to heirs? Are you prepared for the unexpected, such as medical surprises or economically destructive world events?
With a customized plan, you won’t look at the raw investment performance of a wealth manager’s other clients as a gauge for how well he or she has performed. Instead, you’ll look at the history of financial achievements.
If their clients will attest that this manager has helped them live a life of financial freedom and serenity, free from worry, liberated to live without having to spend time managing all their financial affairs, then you know that wealth manager is performing at a high level.
This is because each customized plan will be built around different outcomes. For one client, just in terms of growth, 5% might be all they need. For another, it might be 10%. The reasons why these clients have different goals matter as much as the wealth manager’s ability to achieve both targets.
Another good metric to evaluate a wealth manager: Retention rate. If they have numerous clients who have been with them for 10, 20, 30 years, that’s a strong indicator that this person gives superb service and achieves high performance.
Larger firms are more likely to use a cookie-cutter approach, using the same models and basic plan structures for the majority of their clients.
4. Private Wealth Managers Won’t Pawn You Off
With a smaller firm on your side, you can assure yourself that your advisor will be your advisor for the long haul.
It’s incredibly frustrating to sit through all the onboarding meetings and consultations, feel like you have a great rapport with someone, and then get passed off to some other worker at the company a couple weeks later. Kind of like your mortgage being sold to a new company every few months.
For instance, Pillar has just two wealth managers – Hutch Ashoo and Chris Snyder. Whichever of us develops your customized financial plan will be the person who walks with you for the foreseeable future. We will not pass you off, because we have no one to pass you off to. It’s just us!
And this leads to reason #5.
5. Private Wealth Managers Cap Their Client Numbers
Each wealth manager can only effectively work with a certain number of high net worth and ultra-high net worth investors. The work is simply too involved to take on unlimited clients. And unlike the larger firms, boutique wealth management companies will not just go out and hire more advisors to handle the volume.
That’s not how we operate.
When we reach our limit, we stop accepting new clients. A private wealth manager should refuse to compromise on the quality of their service and their devotion to each client.
6. Your Wealth Manager Should Be a Fiduciary
This cannot be overstated. And not all private wealth managers are fiduciaries either. But the large public ones are more unlikely to be.
A fiduciary wealth manager must operate solely in the best interests of the client.
This means, for one, they won’t offer you proprietary investment vehicles just because those plans make them more money. They will build a customized plan that attempts to serve your interests first and only.
Fiduciary also means they will not charge commissions for the sale of certain investment products, such as annuities, or particular funds. Or if they did, they would disclose it plainly and explain why it’s still in your best interests. Though the reality is, that’s pretty rare.
You want a fee-only fiduciary wealth manager, where the fee is known, transparent, and in most cases, unchanging. ‘Fee-only’ means they charge a set fee, usually a percentage of your total invested assets. Some advisors charge flat fees or hourly, but this is actually a warning sign that you might want to look for a different wealth manager.
To see why and learn more about what financial advisors charge, go here
Pillar charges a flat 1% fee (reduced after the first $10 million). No commissions. No additional fees for other services. One all-inclusive rate.
7. We Actually Return Your Calls
Part of the motivation for limiting our client numbers is so we can confidently assure you that when you need to reach your wealth manager, you’ll be able to.
You won’t get caught in a phone tree for 20 minutes and end up talking to a different person each time you call. You’ll speak with the same trusted wealth manager every time. And because you’re known, you won’t have to waste time verifying your information every single time you call. We already know you.
We’ll know you just by your voice before too long.
In general, private wealth managers are easier to communicate with by phone, email, or otherwise.
This is something you certainly want to ask about in your initial meeting with a prospective wealth manager. The worst possible outcome is to end up with a wealth manager who doesn’t care, doesn’t return your calls, and can’t answer your hardest (and most important) questions.
8. Private Wealth Managers Deliver More Value
This Investopedia article recommends not shopping for a wealth advisor on price, but on value. It’s smart advice.
For one, the majority of wealth managers charge pretty similar fees, assuming they’re fee-only advisors. The differences are minor compared to the value of their full line of services. That’s where you want to spend your time getting some details.
For instance, some private wealth managers will help you with questions related to other areas besides just your portfolio. At Pillar, we also help you with:
- Tax accounting and strategic planning
- Retirement planning
- Legal planning
- Estate planning
- Trust services
- Banking services
- Philanthropic planning
- Real estate questions
- Business mergers and acquisitions
- Insurance questions
If you need a specialist in these areas with more expertise than us, we will help you find one. More than likely, we already know a few in the San Francisco Bay area because we’ve been at this for a while.
And – all of this is included in our 1% fee.
Consider that. This is what the Investopedia writer meant by ‘value.’ If another wealth manager charges .8%, but charges extra for all those additional services (or doesn’t offer them at all), then what are you really getting for that 0.2% savings?
You’re getting a lot of extra work at your own expense when life happens, as it surely will one day.
9. Private Wealth Managers Can Describe Their Ideal Client
With large firms, their ideal client is anyone who comes through the door with money to invest, because more clients means more revenue. If they’re a public company, that’s what counts.
But a private wealth management company will be more selective in who they work with.
They will tell you if you’re not a good fit, and will likely recommend some other wealth manager options for you in that event. It’s more important to a wealth manager to work with their ideal clients than to just increase revenue.
10. Private Managers Will Be More Experienced
More than likely, a private wealth management company will be run by someone with deep and rich industry experience, working exclusively with high net worth and ultra-high net worth clients.
You should expect to be asked for a minimum investable assets amount before you can work with a wealth manager. Pillar’s minimum is $1.2 million.
We have over 30 years of experience working with high net worth clients, and with a track record of achievement trailing us the whole way.
But ‘experience’ must be measured in more than just years. You can do something for a long time and still not be very good at it. Our experience has led to the development of an innovative approach to creating truly customized investment plans.
We’d love to walk you through our process.
One of the outcomes you will receive is a picture of your financial security for the foreseeable future. We call this the Comfort Zone, and after we take you through a free Wealth Management Analysis meeting you’ll find out what it is, and if you’re in it. If you’re not, we’ll talk to you about what steps you can take to improve your long term security.