The Complete Guide to What We Do
A private wealth advisor’s services can often be the difference between a happy, fulfilling lifestyle and a satisfactory one. Should you happen to read our guide for people with $10 million+, you’ll find that wealth advisors usually top the recommended financial advisors list for affluent investors. That’s because these firms provide exclusivity and personalization you won’t find anywhere else.
For example, Pillar Wealth Management is a wealth advisory firm that only takes a select number of clients who have $5 million to $500 million. We do this because we want to make sure that we can provide the energy, time, and personalization that each client deserves. Our experts know that pre-set plans and cookie-cutter tactics will seldom work for affluent investors with complex needs. If you need more information on your personalized wealth management strategies, meet with us for a free chat.
It’s natural to still have a lot of questions about wealth advisors. As a result, this article is geared towards helping clients find answers to questions like:
– What is a private wealth advisor?
– Why do you need a private wealth advisor?
– How can a private wealth advisor help you live better?
Table of Contents
What is a Private Wealth Advisor?
A private wealth advisor is a type of financial advisor that provides a comprehensive combination of financial planning, financial advisory, and investment management services to high net worth and ultra-high net worth clients.
What makes wealth advisors special is that clients do not need to go to other financial advisors or planners to get any other services. They can find almost all of their financial needs fulfilled by the private wealth advisor. A detailed look into all types of financial advisors can be found in our ultimate guide.
Put simply; wealth advisors help their clients live with financial serenity. They manage your risks, invest your money smartly, and grow your wealth sustainably to help you achieve your lifestyle dreams.
That said, there are some differences in the quality of wealth advisors themselves. Often, the services provided by fiduciary wealth advisors and non-fiduciary wealth advisors can provide vastly different values to clients.
In order to fully answer the question of “what is a private wealth advisor?”, let’s discuss why the services of fiduciary and non-fiduciary wealth advisors are different.
Fiduciary vs. Non-Fiduciary Private Wealth Advisor
Firstly, what exactly is a fiduciary advisor?
Fiduciary financial advisors are under a legal relationship/obligation with their clients to prudently conduct wealth, investment, and asset management on the client’s behalf. Put bluntly; fiduciaries put their clients’ interests even before their own. They need to uphold the highest ethical standards to do so.
In order to become a fiduciary, a private wealth advisor must be approved and licensed by the SEC to become a Registered Investment Advisor (RIA). They must have rich experience in the industry, undergo robust training, and have the ability to conduct their business ethically.
You can probably tell by now that fiduciary advisors represent the epitome of wealth advisory and management services. Unfortunately, most financial advisors and wealth advisors are non-fiduciaries. This is especially true for wealth advisors at large private banks or institutions because they are usually individuals who are just starting their careers.
There isn’t anything inherently wrong with non-fiduciary advisors. They also help their clients with financial and investment advice. They also want what’s best for you. However, why go for the 2nd best option when you can have the best?
The truth is that non-fiduciary advisors can rarely compete with the immaculate services of a fiduciary. They simply won’t be able to put the same effort into eliminating conflicts of interest from their processes, and neither will they have the same experience or expertise.
Non-fiduciary advisors often have to juggle various interests at the same time. There’s the client’s (your) interest, their supervisor’s interest, their employer’s interest, and their own interest. Everything works when wonderfully when times are good because everyone wins. However, who can guarantee that your interests will be the top priority when things go south?
To talk to a fiduciary advisor who will never entertain any conflicts of interest, book a free discussion with us.
Why Do You Need a Private Wealth Advisor?
Managing your wealth is something you’ve already done throughout your life, and you’ve done it well because it’s gotten you to where you are now. So, why do you need a private wealth advisor to do something you’ve already been doing? This is a very valid question that’s often asked of us.
Though a private wealth advisor’s services aren’t necessary, they’re recommended for most affluent investors. The reasons behind this recommendation revolve around convenience and expertise.
As you grow older, your priorities aren’t the same. You don’t have the same energy or time to attend to your finances as before. Where before you could spend hours every day monitoring your investments, you may now want to spend more of your time with family or living out your dreams. Your priorities don’t necessarily revolve around money.
Managing wealth of this size requires a combination of time, effort, commitment, and expertise. Chances are, you won’t be able to provide at least one of these factors without sacrificing other things in your life.
A private wealth advisor for ultra-high net worth clients can take the burden off your shoulders. Instead of worrying about your next financial moves or your strategies for managing risk, you can start focusing on the things that really matter to you: family, legacy, lifestyle, passions, and so on.
If you read our hardcover book, The Art of Protecting Ultra-High Net-worth Portfolios and Estates – Strategies For Families Worth $25 Million To $500 Million, you’ll find loads of examples of how ultra-high net worth families are now enjoying a life of financial serenity thanks to their fiduciary private wealth advisor.
If you’re still not quite sure, you might want to know exactly how can a private wealth advisor help you live the lifestyle of your dreams. Keep reading to learn how!
How Can a Private Wealth Advisor Help You Live Better?
In our guide for families worth over $10 million, we provide many avenues for affluent investors to explore when they are looking to grow their wealth. One of the best methods to do so is by seeking the assistance of a wealth advisor.
But the question still remains, how can they help you? Let’s explore some of the benefits you may get.
They Ask the Right Questions
Though this may sound like a very simple statement, it’s ramifications cannot be understated. Having the knowledge and experience to ask the right questions and get the right answers is not something you can learn overnight.
For example, the most common line of questioning by financial advisors starts as:”What returns do you want to earn?” and “What is your risk tolerance?”
Most inexperienced advisors will use a line of questioning that more or less revolves around these questions. Why is this a problem?
The fact of the matter is that your goals don’t revolve around your returns. Rather, it should be the other way round! The optimal return for your portfolio should be calculated only after taking everything else into account. Plus, your risk tolerance isn’t some constant figure. It changes according to circumstances, and rarely will you have someone say they’re open to the idea of risking wealth loss!
No matter what, everyone wants to protect their wealth first. Experienced private wealth advisors for ultra-high net worth clients know this. They understand that the right questions and answers revolve around the lifestyle, legacy, achievements, etc., you want to have.
How Wealth Advisors Gauge Your Goals
A private wealth advisor with the right experience will know that this is a process that cannot be rushed. You need to take your time and do a hard evaluation of your priorities. Some of the things your advisor may look at include:
– Family circumstances
– Retirement dreams
– Value of time and money
– Your and your family’s health
– Incomplete/unsettled disputes or deals
– Pursuits you care about
– Sources of current and future income
Once all factors are considered, and your goals are decided, you can describe your portfolio performance. You will now talk about the income or growth you need to achieve your goals. See the difference? This is just one of the many changes in philosophy we try to instill in investors via our guide.
They Ensure Financial Serenity
This is one of the most important benefits provided by a private wealth advisor. Don’t look for advisors that will just blindly chase the highest returns. Opt for advisors who will prioritize your financial security over everything else. As mentioned in our guide for portfolio performance, only chasing returns will rarely bring you joy in the long run.
When investors ask for portfolio performance, all they want is financial security with minimal risk. Nobody wants to put their wealth in danger, especially those who are high net worth or ultra-high net worth.
A typical retiring investor may ask you, “Could I earn $40,000 from my investments without losing my wealth?”
This signifies how important it is to get a balance. This is financial security – a situation where the individual has enough money to meet their goals and lifestyle needs.
Financial serenity goes even beyond this. Financial serenity is achieved when the investor does not have to ever worry about their wealth again. Only an experienced fiduciary, private wealth advisor can do this for you.
They Ensure Lower Costs and Better Gains
As we’ve discovered, portfolio performance isn’t just about the returns you make. By finding costs that erode your gains, you can make just as much of an impact on your portfolio as a few extra percentages in returns.
Plus, this strategy provides a long-term benefit in making sure that you don’t start losing your wealth. It’s understandable that many investors do not have a lot of knowledge about these costs, but the truth is that some advisors don’t either! As a responsible investor, you should learn all you can about this topic and make sure that the advisor you hire knows what they’re doing.
Here are the five costs you can usually avoid. Ask your advisor about their ability to identify these unnecessary costs and reduce them.
The first culprit is performance-based fees. They’re paid to advisors when they achieve a certain milestone (return) with your investments, and doesn’t seem too bad at first glance. However, it has dangerous side effects.
Performance-based fees can often provide a motivating factor to your advisor to go “gung-ho” and chase aggressive returns. As we know now, the chances of long-term success with an aggressive investment style are quite low. It’ll also put you under more risk than you bargained for.
Margin Interest Costs
Margin interest is something you should almost always avoid. Many advisors allow investors to take out cash loans against their assets. This allows investors to free up some liquid cash and put it to use. However, you are charged a margin interest on the loan you’ve taken out.
Now, you got two problems on your hands:
– Higher interest costs
– Higher advisor fees since there is more money in your advisor’s control.
Thus, try to avoid margin interests as much as possible.
Bond Spread Investment Costs
The bond spread is the difference in the selling and buying price of a bond. Some advisors sell bonds for their clients for a slightly lower price than the market price and buy bonds for them at a slightly higher price.
The difference between those prices is the spread. Note that no fiduciary private wealth advisor would ever endorse a pay structure like this because it has the potential to create conflicts of interest. Plus, it will be very expensive for you in the long run.
You can never optimize your portfolio if you incur costs like these.
Internal Investment Costs
Internal investment costs are usually hidden in the fine print of contracts. Imagine that your standard investment option at a private bank has a very normal 1% fee. You sign the agreement, and your advisor asks if you also want to invest in securities other than stocks.
You say yes and find out a month later that your fees have multiplied for availing this extra service. When you go for a private wealth manager like Pillar Wealth Management, there are no hidden costs. Visit our website and book a chat with us to learn more about our fiduciary services.
Tax Loss Cultivation
Tax loss cultivation is usually something only an expert wealth advisor can do. An intelligent wealth advisor keeps an eye on your portfolio and uses any opportunity to offset the realized gains of some stocks with the losses of others. This can help reduce taxes and save money.
Final Words on Private Wealth Advisor
Learning the benefits of a private wealth advisor could possibly have opened your eyes to a whole new world of opportunities. Though going at it alone may seem tempting, a private wealth advisor can do much better in this case. This is because most investors do not have the time, expertise, and commitment needed to efficiently manage their wealth.
Should you happen to be on the lookout for a fiduciary advisor, Pillar Wealth Management can provide a massive range of financial services with no hidden costs. Investors with $5 million to $500 million can start living with financial serenity by starting a discussion with us for free.
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