Choosing a Financial Advisor: Strategies to Use
Choosing a financial advisor is one of the biggest decisions many affluent investors face as their wealth grows beyond their own control. Depending on whom you choose, these specialists can be your knight in shining armor or a decision you regret. Our special guide for investorswithmore than $10 million in investable assets gives details on the challenges you might face when choosing a financial advisor.
STRATEGIES FOR FAMILIES WORTH $5 MILLION TO $500 MILLION
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.
Financial advisors, such asPillar Wealth Management, who service investorsthat have$5 million to $500 million in investable liquid assets, need to have certain skills and traits to be attractive to affluent clients. You can schedule a consultation with one of our wealth managers to learn how we can help you build your wealth.We will explore all these traits in detail and help you find the best financial advisor for your current situation.
This article will answer all questions like “what is a high net worth financial advisor?”, “what skills to look for in a financial advisor?”,“how do I hire a financial advisor?”, and“when should you use a financial advisor?”. Keep reading to learn more!
Table of Contents
What is a High Net Worth Financial Advisor?
Before you can completely understand the steps to choosing a financial advisor, we need to answer the question, “what is a high net worth financial advisor?”. So, let’s explore what types of financial advisors you can find and what they do.
Financial advisory firms can provide a variety of different services to investors. This includes, but is not limited to, advice on investment portfolio management, managing your investments, estate planning, retirement planning, or downrighthandlingof all ofyour wealth!
The services you will get from a financial advisor will depend on their level of expertise, experience, and the type of institution they work for. Here are some types of financial advisory services you may find.
Investment brokers are a very common type of financial advisor and are very often one of the first options people think of when choosing a financial advisor.
A broker mainly works with the investment side of your wealth andmay provide some advice on the securities you shouldsellorbuy. However, their primary job is to conduct the buying and selling transactions of securities chosen by their clients.
Investment advisors often fall under the same umbrella as investment brokers. They specialize in providing investment advice to clients based on their risk appetite and return goals. However, that’s pretty much where their role ends. An investment advisor will usually not do any more than provide advice on what investments you need to make. You’ll have to find someone else to do the execution.
One easy way to tell the difference between an investment broker and advisor is to see how they are paid. Investment advisors will typically earn money via an annual fee. On the other hand, brokers may often charge commissions on every transaction you make. Product-based compensations and commissions can potentially cause a conflict of interest, so you may need to watch out. We’ll discuss more about this later. You could also read our guide to learn more about the difference between fees and costs charged by financial advisors.
Theseare a very niche group of advisors and aren’t often included in the conversation when affluent investors are choosing a financial advisor. Since they manage a financial portfolio for their customers, many people also refer to them as portfolio or investment managers. Asset managers are unlikely to offer any financial advice and will just manage the portfolio according to your directions. They can be a suitable avenue for investors who already have a high degree of wealth management knowledge and only need someone to do the tasks for them.
Would we say that asset managers are the best high net worth financial advisor? Our experts don’t believe so. Overall, they’re usually only suitable for a very small group of individuals who know exactly what to do with their portfolio.
Certified Financial Planners (CFPs)
Certified financial planners provide financial planning services to investors to help them in areas like retirement planning, estate planning, etc. CFPs go through rigorous training in their field of specialization and are usually fiduciary advisors.
CFPs will usually not be involved in any investment or wealth management. They’ll only exclusively provide financial planning.
Wealth managers are usually the option we recommend to high net worth and ultra-high net worth investors when they’re choosing a financial advisor.
Wealth managers typically provide a one-stop-shop for investors. From determining your financial and life goals to investment management and all other aspects of financial advisory, wealth managers assist their clients through everything. We’ve found that a holistic service, such as the one provided by wealth managers, is often more impactful for affluent investors. You can read more on the benefits of wealth managers for individuals with more than $10 million in liquid assets in our guide.
This is by no means a complete list of financial advisors that you canfind. However, we don’t feel that other services and types of financial advisors provide enough value to affluent investors.
All that considered, exactly when should you use a financial advisor? When are their services worth it? Let’s find out.
When Should You Use a Financial Advisor?
This is a very personal question that requires a fair bit of introspection to answer properly. Most affluent investors do a good enough job of growing and managing their wealth throughout their working years. They don’t just to get to this point with pure luck.
However, your priorities begin to evolve as the years go by. It’s natural to not have the same amount of time as you once did. You’ve got other responsibilities too, like a family to take care of or properties to maintain. Plus, you might want to relax and finally live the lifestyle you want without worrying about your money.
This is the point where choosing a financial advisor becomes critical. The top financial advisors know that your priorities aren’t similar to those of a regular investor.You don’t need to earnexorbitant returns anymore. All you want is to protect and grow your wealth in a way that gives you financial serenity. Here, the best wealth managers can lift the burden from your shoulders and do all the work for you.
At Pillar Wealth Management, our experts appreciate the nuances in our client’s needs. We recognize that everyone is different. Our strategies and plans will always be customized to suit your individual situation and needs. Ready to talk more about your future plans? Get in touch with us for a free consultation.
What Skills to Look forIn a Financial Advisor?
First, you should use the information provided earlier in the article to decide what type of financial advisor will suit you best. How much support do you need in handling your wealth? What’s your present financial situation? Wealth managers are usually the better option for most high net worth and ultra-high net worth investors because of the services they offer.
Once you have made your decision, here are the qualifications you should search for when choosing a financial advisor.
When anyone asks us about “what skills to look for in a financial advisor?”, our first answer is always the same: a history of excellence and comprehensive experience of working with investors of your caliber.Wealth management and financial advisory are fields that require true experience to fullycomprehend. A manager’s experience allows them to understand what high net worth and ultra-high net worth clients truly need. As time goes by, they will also realize that cookie-cutter techniques and pre-made models very rarely work for affluent investors.
Growing and preserving the portfolio of ultra-high net worth investorswho have investable assets worth over $25 million is no joke. It calls for a high level of care, knowledge, and planning. It would be unnecessarily risky for you, as an ultra-high net worth investor, to put all your trust in an inexperienced manager. The free copy of our book,“The Art of Protecting Ultra-High Net Worth Portfolios and Estates – Strategies For Families Worth $25 Million To $500 Million”, further elaborates on the role of expertise and experience wealth management of ultra-high net worth clients.
Pillar Wealth Management professionals understandthe nuances of your unique situation and create a customized plan with a focus only on achieving your goals. You can speak about your life goals and financial situation with our experts by scheduling a free chat through our website.
2. Goal Realization Capabilities
The crux of this point is that your advisors should be able to invest towards your goals without emotion. They should have objective processes that comprehensively eliminate emotion from investment decisions.
For instance, Pillar Wealth Management deploys a plethora of components to ensure all our decisions are only based on our knowledge, experience, and data. There are never any emotions involved. Our only goal is to help you achieve your objectives.
A couple of examples of the components we use to achieve your goals are the Efficient Frontier and the 1000 Scenario Portfolio Stress Test. Both of these components allow us to anchor your portfolio to a point where it not only meets but also exceeds your goals. Our experts will be more than happy to explain all the details about our investment processes – you can get in touch with us for a free chat via our website.
3. Risk Mitigation Skills
Risk management is a core skill you should watch out for when choosing a financial advisor. Though almost every advisor will have really attractive plans on how to maximize your returns, only the best ones will create processes and strategies that objectively eliminate risk.
They also won’t take it lightly either. A common misconception we see all too often is that diversification is sufficient in reducing portfolio risk. While diversification can mitigate or eliminate non-systemic risks associated with certain stocks, they aren’t enough to tackle systemic risks. Yes, systemic risks affect the whole market and are largely unavoidable. But that does not mean you can’t reduce their impact on your portfolio.
How can we do that? Pillar Wealth Management experts note thatconsistent asset allocationscan often do the job where mere diversification fails. Having an optimized and consistent asset allocation in bonds, equities, and cash is likely to curb the impact of systemic risk more successfully.
Of course, it can’t keep you from losing money during poor market conditions, but it will at least reduce the impact of the loss. Where you were previously losing $15 million, you would now lose only $5 million. The difference a healthy asset allocation makes to your portfolio performance is often astounding. You can find more details on portfolio performance maximization in this guide.
Always ask potential advisors about their risk minimization tactics.
4. Cost Reduction Expertise
When choosing a financial advisor, you need to find someone that is as passionate about saving every dollar in your bank account as you are. Identifying and eliminating unnecessary or avoidable costs can often be just as critical as making a positivereturn. This is exactly the sort of paradigm shift we encourage at Pillar Wealth Management. Our exclusive guide provides more details on other paradigm shifts we encourage all our clients to make.
We know people who’ve lost hundreds of thousands of dollars because of negligence regarding costs! Always ask potential advisors about hidden or unnecessary costs and their plans to eliminate them.
Look for a Fiduciary Advisor When Choosing a Financial Advisor
We wanted to give a special mention to this topic because we feel it is extremely important for affluent investors.
When choosing a financial advisor, always make sure you go for a fiduciary advisor. These individuals are licensed by the SEC to always work in your best interests and to make decisions without the influence of any external factors. They are legally obliged to eliminate any conflicts of interest and have to meet a set of stringent quality standards to become certified. With experienced fiduciary advisors, you can rest easy in the knowledge that your wealth is in safe hands.
That’s not to say that non-fiduciary advisors won’t want to act in your best interests. They would. However, they sometimes have to contend with conflicts of interest from their employers or supervisors. They may not be able to think without emotions at all times.
How Do I Hire a Financial Advisor?
Choosing a financial advisor and eventually hiring one is a long process. You should always take your time and explore all the options before coming to a decision. Use the guidelines we’ve mentioned in this article as a checklist to make sure you work with the best advisors out there.
Investors with $5 million to $500 million in liquid investable assets can look towards Pillar Wealth Management as reliable fiduciary experts with over six decades of combined experience in managing and growing the wealth of high net worth and ultra-high net worth clients.You can use our website to schedule a free chat with us today, and we’ll explain why our methods work.
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