Can Large Brokerage Firms Effectively Help Ultra High Net Worth Families?

Large brokerage firms like Fidelity, Schwab, and Vanguard are excellent companies when it comes to serving the investment needs of typical middle class and middle-upper class American investors.

But can they help ultra high net worth families at the same high level?

Your investment and financial planning needs as a family with eight or nine figures of net worth have almost nothing in common with a typical investor who might have $500,000 to manage as they near retirement. For them, it’s mostly about just making the money last.

STRATEGIES FOR FAMILIES WORTH $5 MILLION TO $500 MILLION

 

7 Secrets To High Net Worth Investment Management, Estate, Tax and Financial Planning

 

The insights you’ll discover from our published book will help you integrate a variety of wealth management tools with financial planning, providing guidance for your future security alongside complex financial strategies, so your human and financial capital will both flourish.

Clients frequently share with us how the knowledge gained from this book helped provide them tremendous clarity, shattering industry-pitched ideologies, while offering insight and direction in making such important financial decisions.

For you, it’s much, much more.

We’re going to show you what we found over the course of a unique, in-depth investigation into how three large brokerage firms attempt to serve ultra high net worth families and investors. What you’re about to read is unlike anything you’ve seen before.

And for even more depth, you can dive deep into the differences between large brokerage firms and ultra high net worth wealth management and multi-family office firms in our free guide,7 Secrets to High Net Worth Investment Management, Estate, Tax and Financial Planning.

Mystery Shopping the Large Brokerage Firms

Pillar Wealth Management wants affluent investors to have clear and thorough information about the very significant life and financial decisions they face. Whether you work with us or not, you need to know the facts so you can make intelligent choices with confidence.

To that end, we did what’s referred to as ‘mystery shopping,’ with the large brokerage firms Vanguard, Schwab, and Fidelity as our subjects. See the pros and cons of each firm.

We created a fictional persona with a unique ultra high net worth life situation, and hired someone to call up each firm, present their situation, and see how these companies attempt to serve people in situations that more closely resemble yours.

The whole process took several months. We held multiple calls with each firm, received a proposal in some form detailing what they would do with our assets, experienced their customer service, worked with their online platforms, and got a pretty good sense of their service to ultra high net worth clients.

This article is one of many we will be writing based on that investigation.

We also produced a checklist detailing the similarities and differences between the three firms and Pillar Wealth Management.

Brokerage Firms Help

Why Are the Needs of Ultra High Net Worth Families so Different?

Before we look at what our investigation of the large brokerage firms found, you need to be sure you understand how different your situation really is from a typical investor who uses the investment services of Schwab, Fidelity, or Vanguard.

In brief, here are the key differences. Ultra high net worth families:

• Have very specific and unique situations that don’t fit easily into boxes

• Face financial challenges that have great complexity, and this complexity extends to other areas of your life

• Must make big decisions that are best aided by having multiple sets of detailed options, with projected outcomes for each

• Face high stakes – big money and big life opportunities are in play depending on what you do

• Have financial situations that are always changing as markets and businesses grow and decline

Typical investors – and even those with $5-10 million – don’t have to wrestle with these issues with very great difficulty. But once you start hitting around $20 million in liquid net worth and rise into the mid and upper eight figure range, everything changes.

Want to start a new business? Start a foundation? Fund a feature film? Buy out a rival? Sell your business? Sell your real estate properties? Pass your property on to an heir? Sell your stocks? Keep your stocks?

Worlds of opportunity open up once your net worth reaches this range. But what should you do? What shouldn’t you do? Who can help you make decisions like this?

What about estate planning? Your family relationships are as complicated as anyone else’s, but when you add in the element of great wealth, all that complication magnifies. Whether you’re talking about prior marriages, elder family members, kids who are or aren’t responsible, and other key life relationships, with great wealth comes great complexity.

We’ve seen ultra high net worth investors who are over 80 years old and have $100 million to their name and no idea what to do with it. Still just living each day, doing nothing that much different than people with far less wealth.

Is that the situation you want to be in when you reach that age?

Money must have a purpose. Otherwise, why have this much of it?

If this is striking a chord with you, we recommend getting a complimentary copy of our book – The Art of Protecting Ultra-High Net Worth Portfolios And Estates: Strategies for Families Worth $25 Million to $500 Million.It will answer a lot of questions and open your eyes to the unique world you’re living in.

You can also start a conversation with one of our founding wealth managers, each of whom have over 30 years of experience working with ultra high net worth families like yours.

3 Ways the Large Brokerage Firms Fall Short in Serving Ultra High Net Worth Families

Let’s be clear about one thing: Fidelity, Schwab, and Vanguard are all great companies. We even use them for some of our custodial accounts. What we’re talking about here is how they serve a very special and unique type of customer. But none of this takes away from their excellent platforms, quality people, and trustworthy service.

 

1. They Vet You – and Waste Your Time in Doing So

None of these companies have a dedicated phone number or email address set aside just for people like you. If you call them up – even using the phone numbers listed on the wealth management web pages they’ve created for ultra high net worth investors – you will still end up talking to someone other than the person who can actually help you.

This person’s job is to vet you. They want to assess your situation, understand your needs, and once they’ve determined you need to work with a high net worth specialist, they transfer you to that person.

This takes time. It means waiting for people to call or email you back. It means not fumbling the handoff between the person doing the vetting and the high net worth specialist.

Unfortunately, all three companies failed at some aspect of this.

Vanguard was the fastest to reply to our query and we were able to talk to their first person very quickly. But the transition from that person to the high net worth specialist fell through, and over a month went by without a word from them. It didn’t make our situation feel important to them.

Fidelity was also quick to get started, but not only did they not connect us with a specialist, it took several calls with this other person before they realized our situation was more than they could handle, and then we got transferred to the high net worth specialist.

Schwab was the slowest to get us into their system, but had a clean transition from the person doing the vetting to the high net worth specialist, who was also local, unlike the other two firms.

The point is – the time it took between when we filled out forms online to get started and when we talked to the actual high net worth specialist was over a month in all three cases.

 

2. They Admit This Isn’t Their Bread and Butter

All the high net worth specialists we spoke with were very knowledgeable. And they were pleasant to speak with – they talked very differently than the people doing the vetting. So, they do understand ultra high net worth households like yours to a good degree.

But the deeper you get into their process, you realize that the person you’re talking with is not actually a wealth manager in the full sense of the word, and certainly not the leader of a multi-family office company.

Schwab’s process for serving ultra high net worth families is to connect you with the Schwab Advisor Network, a group of wealth management specialists they have vetted, who are Registered Investment Advisors.

The Schwab specialist is your advocate with these other experts. They will help you understand what the RIAs are doing and proposing, and help you make smart decisions.

And, there’s nothing wrong with this approach. But we must state the obvious – it is not Schwab doing your actual wealth management! It is some other advisor who specializes in serving people with ultra high net worth.

Fidelity uses a similar approach, and though they don’t require you to work with an external advisor like Schwab does, it was still clear that this was something they want you to strongly consider.

So again – nothing wrong with that, but Fidelity itself, as a company, isn’t necessarily set up to manage your ongoing and ever-changing high stakes decisions and situation.

Vanguard didn’t mention an external network, but they are also the most rigid in their investment and wealth management approach. For instance, they don’t do any stock investments – just mutual funds. So if you go to them with individual company stocks, they will tell you to either manage them yourself, or sell them so they can manage the capital for you.

They are very clear about the philosophy behind this – it is done to protect your investments from what they see as undue risk. So it’s not rigidity for the sake of being difficult. But it is, nevertheless, not a situation that allows you to explore a more complete set of choices. And if you come in with an already-complex situation, to work with Vanguard you would have to do a lot of simplifying if you wanted them to manage your wealth, create a customized plan, and help you move forward.

 

3. They Talk about It, But They Don’t Do It

All three firms talk at great length about the importance of estate planning, but none of them provide it. Schwab and Fidelity have a set of estate planning attorneys they can recommend; Vanguard leaves it up to you to go find the attorney you want to work with.

All three firms talk about insurance and tax planning. But again, they don’t have the specialists on their staff who can actually implement the things you need done.

None of the large brokerage firms will advise you on real estate investments, as far as we could tell. Fidelity hinted at having some experience with selling businesses and working through the challenges of that.

But when you reach into the deep complexity of all these areas, what you will find at the large firms is a fairly disjointed experience. People are spread out all over, with specialists not necessarily used to working with the others who will end up on your team.

The high net worth specialist is your go-to person for insights and explanations regarding what you should consider doing based on what the other specialists are proposing. They attempt to quarterback the whole thing.

But this is actually what a multi-family office like Pillar Wealth Management does all the time. We don’t have to go hunt for a specialist who is ‘right’ for you. We already know them and work with a small subset of people all the time. We ARE the specialists the large brokerage firms come to for help with people in your situation.
We spend ALL our time working with ultra high net worth families and investors.

If you come to us with $200 million spread across multiple IRAs, individual company stocks, real estate, business equity, mutual funds, ETFs, commodities, insurance, and a foundation, we won’t bat an eye. We’ve seen it before. It’s what we do. We speak the language of wealth.

And when you call us, you speak to the wealth manager on the first call. You don’t have to wait a month to be vetted and transferred.

Find Out More – Schedule an Introductory Call

Authors

To be 100% transparent, we published this page to help filter through the mass influx of prospects, who come to us through our website and referrals, to gain only a handful of the right types of new clients who wish to engage us.

We enjoy working with high net worth and ultra-high net worth investors and families who want what we call financial serenity – the feeling that comes when you know your finances and the lifestyle you desire have been secured for life, and that you don’t have to do any of the work to manage and maintain it because you hired a trusted advisor to take care of everything.

You see, our goal is to only accept 17 new clients this year. Clients who have from $5 million to $500 million in liquid investable assets to entrust us with on a 100% fee basis. No commissions and no products for sale.

More from authors.

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