Questions to Ask Your Financial Advisor –PillarWM
Hiring a financial advisor is a crucial decision that you should make only after you have done thorough research and analysis of all your options. This is more important for high net worth and ultra-high net worth individuals, since you have numerous high-value assets that you need to place in safe and reliable hands. If you have more than 10 million dollars in liquid net worth, you can refer to our Ultimate Guide for the best questions to ask your financial advisor. For your convenience, in this article, we will be answering some of these questions to ask your financial advisor, such as “What are your qualifications?”, “Are you a fiduciary?” and “What are my all-in costs?”
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.
At Pillar Wealth Management, we offer fiduciary advice to clients who have 5 million to 500 million in liquid investable assets. Our wealth managers have the experience you should want in the professional who manages your finances. We can help through our array of wealth management services, including legacy planning, tax management, estate planning, investment management, and risk management. You can schedule a free consultation with someone from our team to learn more about our services.
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Financial Advice for High Net Worth Individuals
Financial advice is necessary for anyone who wants to manage their finances in a sustainable and profitable manner. In particular, if you have a net worth of millions of dollars, you might not have the time or the knowledge to handle all the financial aspects that accompany such a large sum of money. There might be aspects you might not have even considered yourself, such as risk management or tax mitigation.
As financial advisors are well-versed in wealth management matters, they can be of great benefit to high net worth and ultra-high net worth investors. You can use their insights to grow your wealth and protect it for your future and your family’s financial security. So, you need to know the questions to ask your financial advisor before starting a relationship.
Pillar Wealth Management caters specifically to high net worth and ultra-high net worth investors; therefore, we have the knowledge and tools you might need to improve your wealth management. Our services cover various financial aspects, such as investment management, tax planning, risk management, retirement planning, accounting, estate planning, and much more. Contact us to talk with one of our specialists.
What to Look for in a Financial Advisor
When looking for a financial advisor, it takes more than merely asking them, “What are your qualifications?” You can determine whether they’re right for you from the very first consultation using a few simple steps and knowing which questions to ask your financial advisor. You can read more about these steps in our Ultimate Guide, explicitly designed for ultra-high net worth families, with more than 10 million dollars in liquid assets, who want the best possible financial advice they can get.
A financial advisor’s track record speaks volumes. It is a clear indication of their abilities and capability to handle assets worth millions of dollars. The financial industry is competitive and ruthless. Your advisor should have extensive experience to give you the best service that they can while capitalizing on market trends to enhance your wealth.
A proactive attitude is necessary characteristic in your financial advisor. They must be actively monitoring and rebalancing your portfolio to adjust to your changing needs and financial objectives. Your investment portfolio is one of the main aspects of wealth management since it determines how much revenue you generate and how effectively you can secure your assets. You can learn more about maximizing your portfolio’s growth by reading our five critical shifts guide.
As an affluent investor, you are exposed to more threats than just market volatility. The right financial advisor should identify these threats and challenges and suggest strategies or methods to overcome them or protect yourself against them. Preserving your wealth is as important as enhancing it. You can read more about securing your family’s financial future in our hard-cover book, The Art of Protecting Ultra-High Net Worth Portfolios and Estates – Strategies for Families Worth $25 million to $500 million.
Types of Financial Advisors
One of the questions to ask your financial advisor is about which type of advisor they are. The term financial advisor covers a large group of financial experts who are specialists in different fields. The category includes investment advisors, money managers, certified financial planners, certified public accountants, wealth managers, and more. While it is preferred that financial advisors have specialization in their field of interest, it is not mandatory for them to have certifications. Similarly, they may follow a fiduciary standard of care or a suitability standard of care. We will discuss more on this in the next section.
In short, the kind of financial advisor you choose to hire depends more on the type of service you are looking for. Some people purely want advice on their financial plan, while others want their financial advisor to manage all their investments actively. High net worth and ultra-high net worth investors benefit more from financial advisors experienced in working with affluent clients, that is, wealth managers.
Wealth managers are typically fiduciaries, and they understand the complexity of a high net worth portfolio. You can talk to one of our wealth managers to discuss how they can help you manage your finances.
It’s important to know what questions to ask your financial advisor. Here are five critical ones.
Is Your Financial Advisor Right for You? 5 Key Questions to Ask
After you have short-listed a few candidates for your financial management, the next step is to analyze whether they are the right fit for you. You can do this by preparing a list of specific questions to ask your financial advisor to get an idea of their capabilities. Here are some of the questions to ask your financial advisor in your first consultation.
1. Which Services Do They Offer?
As mentioned before, financial advisors can offer one service that they specialize in or a group of services depending on the firm they work with. Hence, to prepare the questions to ask your financial advisor, you will need to identify which service you are looking for and what you hope to achieve from it. Keep in mind that just because a financial advisor offers a particular service, it doesn’t mean that they specialize in it.
Financial planners create a comprehensive plan based on an in-depth analysis of your lifestyle, expenses, and objectives. However, they cannot buy or sell your securities or assets for you. Similarly, a stockbroker can manage your investment portfolio, but they cannot help you in financial aspects such as retirement planning or wealth transfer.
Hence, you need to prioritize your financial needs or hire a financial advisor who offers a holistic approach to your finances, such as a wealth manager. Be prepared with a selection of questions to ask your financial advisor.
2. Do They Follow A Fiduciary Standard of Care?
Reliability and trust are crucial in any business relationship, and even more so when your finances are involved. Among the first questions to ask your financial advisor should be, “Are you a fiduciary?”
Fiduciary financial advisors are legally obliged to act in your best interests and disclose any conflict of interest that might arise. They must also provide full disclosure with any financial advice. In the case of negligence, they can face legal consequences. Hiring a fiduciary financial advisor gives you a sense of security, knowing that your wealth is safe. By asking such questions to ask your financial advisor, you increase your feeling of security.
3. How Will They Be Compensated?
Before you go and hire any financial advisor, it is imperative that the questions to ask your financial advisor include, “What are my all-in costs?” Payment structures can be commission-based, fee-based, or fee-only. In many cases, a management fee is charged in addition to commissions earned on your profits. However, there is a chance of conflicts of interest in these payment structures.
Additionally, hidden costs and transaction fee might not be disclosed by the financial advisory firm right away. Therefore, it is best to read the terms and conditions of their fee structure carefully. Fee-only financial advisors charge an annual fee independent of how well your investments perform in the market. This makes them more suitable for wealthy investors; as you can trust, they’re not pushing you towards certain investments to earn more commissions.
4. What is Their Investment Approach?
An advisor’s investment approach or investment philosophy directly affects how well your portfolio will perform, so an inquiry into their approach is a must-have for questions to ask your financial advisor. Our Performance Guide can help you identify strategies that can improve your portfolio’s performance to generate more profit and minimize risk. There are many investment approaches that are commonly used, such as value investing, growth investing, and socially responsible investing.
Value investing aims to seek underpriced stocks that have the potential to increase in price. The investor purchases these underestimated stocks with the expectation that they will rise in value. Growth investing aims to generate high earnings; therefore, it involves investing in small or newer companies which are predicted to increase in value above their industry or sector average. These are high-risk, high-reward investments which many affluent investors with aggressive portfolios prefer.
Lastly, socially responsible investing takes the investor’s values into consideration. This can include environmentally conscious policies and sustainability. Affluent investors also tend to have philanthropic needs, which can be strategically used by financial advisors to even reduce your taxes. The questions to ask your financial advisor should cover these aspects of the advisor’s expertise and knowledge.
5. Which Asset Allocation Strategies Will They Use?
A rich investor’s goals, risk tolerance, and time horizon are the primary factors in creating an investment portfolio. It would help if you asked your financial advisor how they plan on allocating your assets to help you reach your financial goals in your given time period.
Mainly, financial advisors invest in asset classes such as equities, bonds, stocks, cash, and cash equivalents. For high net worth and ultra-high net worth investors, more categories can be added, such as real estate, antiques, precious jewels, and paintings. Asset allocation strategies can be implemented to generate high-rewards or to protect your wealth. Whichever asset allocation system your financial advisor chooses to go with, your questions to ask your financial advisor needs to include asking them to justify their allocation strategies.
These questions to ask your financial advisor can get you started on narrowing down that list of candidates. Any financial advisor you work with should be clear on your objectives and values. They should communicate with you about your financial plans, be honest about any liabilities or conflicts of interest that you could face, and provide clear answers regarding what are appropriate questions to ask your financial advisor.
Most importantly, the best financial advisors show a keen and active interest in your financial management, regularly consulting with you and providing you updates. None of your questions to ask your financial advisor should be difficult to answer by someone with the right knowledge and financial management skills.
Why You’re in Safe Hands with Pillar Wealth Management
Financial advisors vary greatly in terms of their qualifications, fee structure, services, experience, and standard of care. Now that you have answers to the questions to ask your financial advisor, you are more equipped to make the best choice for yourself. If you’re still unsure about the whole process, you can refer to our Ultimate Guide for more clarity. It will help you determine the best financial advisor for you by outlining the questions that you should be asking them in your first consultation.
Pillar Wealth Management offers exceptional wealth management services to clients who have 5 million to 500 million in liquid investable assets. Our fiduciary, fee-only firm ensures that your wealth is in the safest and most experienced hands. Our wealth managers understand the unique needs of affluent families who want to enhance their wealth and secure their financial future. You can book a free consultation with one of them to get started on your journey to financial serenity.
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