How Do I Find a Wealth Management Advisor

When we watch movies on Netflix, we see ads and other movies that are based on our viewing history. There are interesting developments in the medical field as well, as the digitization of our medical records will mean that we are nudged to do certain exercises, perform certain tests, or buy certain medication even before we realize that we need to do so.

This phenomenon of hyper-personalization is happening across many areas of our life. From the grocery we buy to the entertainment that we consume, there seems to be an integrated approach to give us an experience that is unique to our interests and past behavior.

Wealth management is also no different. Gone are the days when a wealth management advisor acted more like an investment manager. Today, the wealth advisor is expected to be more like an integrated wealth coach who advises on investment, risk management, insurance, taxes, estate planning, and every aspect associated with a client’s financial well-being.

This outcome-based approach across multiple dimensions is exactly where wealth management is headed. And the outcomes for every ultra-high-net-worth individual are unique. Therefore, a personalized focus with a priority of depth over volume is essential for the successful delivery of services.

Let us explore further the role of a modern wealth advisor. What does he/she do? How a wealth manager can help you? How to define your financial goals? And lastly, who is the top wealth management advisor?

If you find these topics interesting, then in addition to reading this article, we recommend that you also check out this complimentary book about successful wealth management and choosing the best advisor for investors with $10 million or more in liquid assets.

What does a wealth management advisor do?

A wealth management advisor is a specific type of financial advisor that helps manage various aspects of a high-net-worth individual’s wealth. A wealth manager combines various financial services to meet the needs of affluent and ultra-high-net-worth clients.

The various disciplines that are covered by a wealth management advisor’s services may include estate planning, tax planning, inheritance planning, retirement planning, investment advice, legal issues, accounting services, philanthropic planning, and succession planning.

As you can tell, the array of services is quite broad and the offering of a reputed wealth management advisor is quite holistic. If a wealth management advisor does not have expertise in a specific area in-house, then he/she will get the necessary inputs from outside experts and even work with the client’s agents (e.g. accountant, attorney) to formulate a synchronized strategy.

A wealth manager charges a fee for the services that he/she offers. This fee can either be hourly, milestone-based, or commission-based. Some wealth management advisors follow a hybrid model which is a mix of two structures. At times, there may be other extra fees/charges and taxes charged on top of the basic fee.

There is also an important difference between a fee-only and a fee-based structure. A fee-only structure involves one single fee which is a percentage (1% usually) of your total invested assets. A fee-based structure can involve multiple fees, via commissions, on products like insurance, mutual funds, etc.

A wealth management advisor is not a money manager or fund manager. A fund manager has only one goal – to invest the money that comes into the fund. The fund manager does not know who the money is coming from or what their personal life goals are.

A wealth manager, on the other hand, has to know the client inside-out. The wealth manager helps the client reach his/her goals rather than simply generate the highest possible rate of return. In fact, in certain cases, it may be perfectly acceptable for a client to earn a lower rate of return in order to fulfill a particular personal finance goal.

How a wealth manager can help you?

A wealth manager brings in knowledge and skills across multiple disciplines. Therefore, you get holistic advice on a range of issues related to your financial life.

High-net-worth clients have diverse issues spanning topics like real estate, philanthropy, taxation, succession planning, retirement, etc. Such individuals either have the option of engaging multiple advisors who each specialize in a particular area or deal with one wealth manager.

A single wealth manager coordinates all of the services that are needed to manage current and future issues related to the financial life of a high-net-worth individual.

So, you do not need to spend your valuable time meeting multiple professionals to handle specific services for you. Plus, if one entity manages all the activities, then everything moves forward in a coordinated manner. If multiple individuals are working on different things, then they may not all be in sync with each other.

A wealth manager also matches your goals with your financial actions. If your goal is to buy a house in Florida and retire there after a few years, then the wealth management advisor will figure out how you can generate enough funds to make that purchase a few years down the line.

The advisor will help you through the journey of generating those funds. If your goal is to send your grandchildren to an elite college after a decade or two, then the wealth management advisor will create a plan to invest a certain portion of a client’s wealth while minimizing investment costs and taxes.

The wealth management advisor creates a plan and then regularly monitors the progress of that plan to ensure that you stay on track to achieve your short, medium, and long-term goals. The tracking and the monitoring part is very important because that is what separates a DIY service or a robo-advisory from a dedicated wealth manager.

A wealth manager helps you figure out where you should invest your money and how much of it should go into each asset class. Getting the asset allocation is very important because it influences the portfolio’s ability to meet your life goals and to prepare you for any unforeseen events.

We recommend reading this book on improving portfolio performance for anyone who has $5 million to $500 million in investible assets.

Thus, as you can tell, there are many answers to the question “How a wealth manager can help you?” If you want to know how Pillar Wealth Management can help you with any specific requirement of yours, then feel free to schedule your free consultation.

How to define your financial goals?

As explained above, we have seen how matching the financial and wealth planning decisions with your financial goals is critical. For that to happen, you first need to know your financial goals. How to define your financial goals is a question that every high-net-worth individual faces.

In order to define your financial goals, you can start by thinking about your lifestyle, major events that will cost significant amounts of money, securing your financial future, and fulfilling your lifelong dreams.

You can start-off by grouping your goals under three categories: short-term goals, medium-term goals, and long-term goals. Short-term goals are events that will require money 1 or 2 years from the current date. This could be the setting up of an emergency fund, purchasing insurance, paying for medical expenses, etc.

Medium-term goals are events that will require money 2 to 5 years from now. This could be a wedding, starting a new business, buying real estate, or sending your kids to college. Long-term goals are events that will require money more than 5 years from now. This could be succession, inheritance, retirement, or philanthropy.

For some people, financial goals can also mean becoming debt-free. Whether it is credit card bills, mortgages, or business loans, paying them off to be financially secure can be a financial goal. Having perpetual cash flows to sustain a lifestyle can also be a financial goal.

Last, but not the least, fulfilling your lifelong dreams is also a financial goal. For someone, a dream could be a world tour. For someone else, it could be writing a book or learning to fly an airplane and purchasing one.

How Do I Find a Wealth Management Advisor?

The old “B2B” model involved local wealth management firms acting as distribution shops for the big Wall Street firms. The smaller firms would have deals with the larger Wall Street companies to push plain vanilla products downstream to the customer.

This one-size-fits-all approach did not take into account the actual financial goals and particular financial situation of each affluent client.

The amount of wealth of each high-net-worth individual was simply matched to a specific group of services. A high level of engagement and personalized financial planning was not (and still isn’t) very commonplace. The generic advice and planning have hurt many portfolios during market crashes.

Every top wealth management advisor will have one thing in common – in-depth knowledge about his/her client. This is perhaps the most important quality.

A successful wealth manager will know how old the client’s kids are, when they will go to college, what sports teams the client likes, and what causes the client is passionate about. It is only when an advisor knows his/her client inside-out can the advisor then craft a customized financial plan to fulfill all of the client’s life goals.

Secondly, a top wealth manager will be ethical. Ethics isn’t just limited to having a clean record on various online databases. Ethics is manifested through actions and the way an advisor approaches the subject of wealth management. For example, aligning the advisor’s interests with those of the client is an important quality.

One way to do this is by acting as a fiduciary. The fiduciary is responsible for always acting in the best interest of the client and informing the client whenever there is a conflict of interest. To be a fiduciary, a wealth management advisor has to actually get a license from the relevant state authority or register with the SEC.

Being an ethical wealth management advisor can also be demonstrated by only recommending products that the client needs. Simply making the client buy products for the sake of earning commissions is not ethical. Similarly, churning investments in a portfolio too frequently will cost the client short-term capital gains taxes. The client’s interest has to be aligned with a wealth manager’s actions.

If you want to gain deeper insights into what differentiates a top wealth management advisor from an average one, we encourage you to download our guide: The Ultimate Guide to Choosing the Best Financial Advisor: For Investors With $5 Million to $500 Million in Liquid Assets today.

Some top wealth management advisors include:

BlackRock – BlackRock is the world’s largest asset manager and also the largest ETF provider. It has more than 30 years of experience in serving affluent clients across multiple countries.

GW&K Investment Management – GW&K Investment Management manages close to $40 billion across 37,500+ client accounts. GW&K specialized in equity and bond investments.

Pillar Wealth Management – Pillar Wealth Management, LLC. is a fiduciary that works 100% on fees, and personalizes wealth management to the needs of its high and ultra-high net worth clientele. Yes, we wrote this article and we believe we belong on such a list. We pride ourselves on offering highly custom wealth management services and in 2020 we are limiting our new clients to 17.

Pzena Investment Management – Pzena is a New York-based financial advisor with $32 billion in assets under management. It has more than 250 client accounts and 23 years of experience under its belt.

Hutch Ashoo and Christopher Snyder are the expert founders of independent, fee-only, and fiduciary wealth management firm Pillar Wealth Management. If you would like to speak with them or simply ask any questions about how custom and trusted wealth management advice is offered to high-net-worth individuals with $5 million to $500 million in investible assets, then feel free to start a conversation here.