Accumulating wealth is not easy. It requires a lifetime of hard work and smart financial decisions. Once you have built a high net worth portfolio of a few million dollars (or a few hundred), your priority is to not only grow that wealth steadily but also protect it during downturns. Investment management firms are experts at growing the asset portfolios of their clients.
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.
Managing wealth is a full-time job. Even if there are DIY options, discount brokers, and robo advisories, ultra-high net worth portfolios require a customized approach that only a dedicated wealth management firm can offer.
Some clients may pay a lower price, give more testimonials on who will be their financial advisor, and can get the best performance for the portfolio.
Knowing when to invest in stocks, bonds, commodities, and other asset classes requires having a deep insight into what markets are doing and how economic cycles are progressing. Investing is tricky. You will either lose money or make money.
Additionally, managing a portfolio isn’t just about the annual rate of return. There are many other aspects that need to be carefully evaluated. Pillar Wealth Management, for example, offers a high level of attention to the complex financial needs of those who have $5 million to $500 million in investible assets.
You could, in fact, perform fabulously on your investments and yet end up with a less-than-satisfactory net amount.
In this article, we will explore how to understand your investment objectives, why choose an investment firm, the pros and cons of investment management firms, and what qualities make the best wealth management and investment management firms.
What Is an Investment Company?
Investment companies in the US are registered and regulated by the Securities and Exchange Commission (SEC). The primary activities of an investment company, which is a business, corporation, partnership, or limited liability company, are to issue securities and invest in securities. An investment company receives money from its clients and pools that money to invest in securities. The clients will then share in the profits earned by the securities in which they invest. Investment companies may buy and sell property, cash, and other funds.
Understanding Investment Companies
There are three types of investment companies: mutual funds (known as open-end companies), closed-end funds, and unit investment trusts (UITs).
UIT and mutual fund shares are redeemable; that is, they can be sold back to the company or to a broker acting for the fund. Closed-end fund shares are not redeemable, and those shares have to be sold to other investors on the secondary market.
A closed-end fund invests the money raised in its IPO in stocks, bonds, and other securities. It sells a fixed number of shares at any one time, and the shares are traded on a stock market such as NASDAQ.
Typically, a UIT will make a one-time public offering of a fixed number of securities; they may operate a secondary market. The termination of a UIT occurs on a date specified when it is created.
ETFs are not mutual funds. They are generally structured as open-end funds but may be UITs as well.
Other types of mutual funds are stock funds, bond funds, and money market funds. An index fund is a type of mutual fund or UIT.
A fund’s assets are diversified and managed by a fund manager, which may involve active or passive investment strategies. The manager is responsible for implementing the fund’s strategy and managing its trading activity, relying on extensive research and analysis of companies and markets. The manager’s skill can influence the fund’s performance.
Investment firms gather their customers’ pooled money to purchase securities and other investment vehicles. They typically offer other financial services, such as tax management.
The Big Three—Vanguard, State Street Global, and BlackRock—according to the Harvard Law School Forum on Corporate Governance, “collectively held a median stake of 21.9% in S&P 500 companies” in 2021.
Many investment firms are appreciated for the services they provide; some of the biggest and best are Vanguard, Edward Jones, Charles Schwab, Fidelity, and BlackRock.
An investment firm or company is a business, corporation, partnership, or limited liability company whose main activities are to issue securities and invest in securities.
Investment firms are paid through customer fees, which are often equal to a percentage of the value of the customer’s investments in the firm. Customers may also pay for trading transactions.
Setting up an investment firm requires filing paperwork with the state, registering with the SEC, a business plan, a marketing plan, computer software and internet access, and fund managers.
An investment firm invests using pooled money from investors interested in the products offered by the firm, such as mutual funds, index funds, and ETFs.
Good investment firms are skilled at creating diversified portfolios while minimizing risk, analyzing companies to determine their revenue and growth potential, and understanding the stock markets.
An investment firm can be structured as a corporation, partnership, or limited liability company, with departments to handle asset and portfolio management, estate planning, and legal and tax.
An investment firm is also known as a fund company or fund sponsor because the products it offers are mutual funds, ETFs, and index funds. An investment firm may also sell alternative investments.
Why Choose Investment Management Firms?
Making investments has become really easy with the growth of technology and fintech. Anyone can now invest money by simply tapping their mobile phone screen a few times — the investment world is literally in the palm of your hands.
However, investing isn’t just about selecting which stocks or a mutual fund to park your money into. You also consider how your capital should be put in and what should avoid such as options trades. Investing has to be done with a purpose. Growing your wealth through investments is a vehicle to achieve your financial and life goals.
It is how we, at Pillar Wealth Management, measure our success when helping clients with $5 million to $500 million in liquid assets. We have managed millions of Assets Under Management (AUM) as we are a highly experienced investment firm.
Your investment decisions are also deeply impacted by your own life. Understanding your lifestyle, your motivations, and your current financial situation is a prerequisite to any investment action.
For example, if your primary life goal is a few decades away, then you know that you have plenty of time on your side. Therefore, your portfolio can withstand higher risks in order to pursue higher returns. For someone who is approaching retirement within the next three years, the age dynamic is very different.
Achieving amazing portfolio performance for your retirement day is not that simple
Similarly, retiring at a dream property in a warm-weather location could be the primary life goal. For someone else, the goal could be to start a business, buy a yacht, and send the kids to an Ivy League school. The financial plans for both these individuals are very different. The cash flow requirements and the timelines of those cash flows are also very different.
Accordingly, the investment decisions for both these portfolios will also be different. We haven’t even talked about the taxation scenarios for all of these financial goals. You can read about improving portfolio performance and measuring that performance in this complimentary book.
An educated person can be well-informed about the markets or about tax laws. However, very few people are good at handling multiple financial aspects.
Very few people can have a grip on the markets, have the ability to learn about someone’s goals and motivations, optimize tax outflows, and be able to connect financial goals to investment decisions. That is where investment management firms come in.
Why choose investment management firms? Firstly, they are experienced in professionally and holistically handling all aspects of a portfolio. Secondly, the stakes are higher with larger portfolios. One wrong decision can cost you thousands of dollars if not more. Most investment management firms are large because of the business model of pooled money from investors who trust their investment vehicles to the company.
When we talk about investment management firms, we don’t just mean hedge funds or portfolio management services. We mean experts who can provide a holistic suite of solutions that cater to all the aspects of a high net worth individual’s financial life. Choose your investment account and consider getting in touch with Hutch or Chris at Pillar Wealth management to know what customized investment advice entails.
Understanding Your Investment Goals
How to understand your investment goals is something you will have to figure out before you even begin studying investment management firms. After all, fulfilling your life goals is the reason why you are investing in the first place. A good investment goal is one that is specific, measurable, and in alignment with your long-term objectives.
One of the best ways to begin crafting your investment target is to make a list of all the things that you want to accomplish in the short, medium, and long term. The short-term could include an emergency fund or purchasing insurance policies to manage risk.
The medium-term items could include getting married, starting a business, buying a home, etc. The long-term goals could be retirement, purchasing a retirement property, going on a world tour, and philanthropy.
You can differentiate your goals as per the time when you want to fulfill them. Anything that needs to be accomplished within 1 year can go into the short-term bucket. Goals that could take 2 to 5 years are medium-term while anything that will take 5, 10, or 20 years can be long-term.
Once you know your goals, you then try and work out how much money you need for each of those goals. This book on finding investment management firms for investors who have $5 million to $500 million talks about the importance of defining the timing of future distributions.
Some longer-term goals like retirement may require a higher amount while short terms goals like an emergency fund may require a smaller amount. Putting an amount to each goal is very important because it makes the goal measurable.
The next step is to think about how much of your wealth you want to spend and how much of it you want to pass on to the next generation. If you plan to leave behind a legacy, then quantify the amount that you want to allocate towards inheritance.
You can schedule your free consultation with Pillar Wealth Management, an investment company that has 60+ years of combined experience in handling such issues for ultra-high net worth individuals. We also offer personal advisor services that can ease you in managing your assets.
Figuring out your investment target as early as you can in your life will work to your advantage. It will give you the room to plan and fine-tune your strategy. If you wait too long, then your investment planning then becomes relatively more complicated.
The more time you have, the greater will be the number of options at your disposal to fulfill your investment goals. The less time you have, the shorter the list of those options. Some challenges may be impossible to overcome. So, start evaluating your investment targets as soon as you can.
Pros and Cons of Investment Management Firms
As an investor, it is always a good idea to evaluate the pros and cons of investment management firms. It will allow you to decide whether you want to work with investment management firms. You will also gain greater clarity on how to shortlist the best investment management firms from a list of promising candidates.
The biggest pro of working with good investment management firms is that you get a dedicated advisor. You do not have to call multiple people for multiple things. You work with one wealth advisor who knows your family and your goals, who updates you periodically, and who is there to answer any question that you have.
Trust and relationships are really important when dealing with large portfolios and that is what a dedicated advisor gives you.
The other big advantage of working with reputed investment management firms is the high quality of investment decisions. Professionals who advise clients on investment decisions are quite knowledgeable and experienced including highly understood about exchange-traded funds or index funds. They have been doing it for plenty of years and their track record shows their ability.
Wealth advisors know where to invest and how much to invest in each asset class. They know when to switch from one asset class to another and how to keep costs down. The cost part is often overlooked but is a very significant part of any portfolio management activity. Schedule your free consultation to discuss how Pillar Wealth Management makes a commitment to save you money by controlling investment costs.
There are some pitfalls which you should avoid when selecting investment management firms to work with. Firstly, you should get clarity on the fee structures of the firms. Two popular models are fee-only and fee-based. Fee-only means that advisors only get paid a fee and there are no product commissions.
A fee-based model can involve fees and/or product commissions. The big difference is that product commissions incentivize advisors to recommend specific products like mutual funds or insurance policies to the client which may not really be necessary. You might not get the bias-free advice that you might expect from investment management firms.
Secondly, find out if the investment management firms have an independent custodian. A custodian is an institution or party (other than the investment firm) that actually holds your investment. The custodian could be a brokerage firms or an asset management firm.
An independent custodian minimizes any potential conflict of interest as you do not want your wealth advisor to directly hold your funds.
In order to find investment management firms with the right ratio of pros vs cons, 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.
Finding the Best Investment Management Firms and a Human Financial Advisor
The best wealth management and investment management firms are the ones that allow their clients to fulfill their financial goals. This is because choosing the best investment advisor can affect your estate planning, financial planning, retirement plan, and so on. The firm could be a big brand name or a highly personalized local service. In fact, the brand and scale make little difference because some big names tend to use cookie-cutter approaches.
They may have too many accounts to manage and may, therefore, invest every client’s money into the same 3 or 4 funds regardless of the client’s goals and requirements. Pillar Wealth Management focuses on quality over quantity and, in fact, signed up only 17 clients last year.
In order to explore if this exclusive wealth management service is right for your needs, schedule your free consultation.
Some investment management firms tend to shift funds and stocks way too frequently. They do not realize that the short-term capital gains tax will wipeout whatever extra return they are attempting to squeeze out by switching. Besides, transaction fees also being a consideration before making the decision. Good investment management firms are ones that understands all the implications (including costs) of each investment decision.
The best investment management firms also constantly monitor the progress of their client portfolios. Investing is not a click-and-forget activity. It requires constant monitoring of the investments and also of the client’s financial situation.
Regular stress tests need to be performed to confirm that the client will meet his/her life goals.
Regular feedback needs to be given to the client to keep them up-to-speed with their portfolios. A personal touch is needed to gain the confidence and trust of the client. In this complimentary book on finding the best wealth management advisor for high net worth individuals with $10 million or more in liquid assets, we talk about the 5 non-negotiables that you should seek in an investment advisor.
Lastly, the best investment management firms listen to their clients. They genuinely spend time and resources to get to know the motivations, goals, lifestyles, and personalities of their clients. It is only when they know their clients that they can craft a customized strategy for each one of them. They tend to focus on depth more than volume.
Large investment management firms like Fidelity Investments, Vanguard, or Schwab may not be able to guarantee you great services and results. However, a small investment company can do better as they pay a great deal of attention to their clients. Pillar Wealth Management is one of them.
Hutch Ashoo and Christopher Snyder are the expert founders of independent, fee-only, and fiduciary wealth management firm Pillar Wealth Management. You can take a look at our services by visiting the website, accept the cookies, and get what you need.
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.
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.
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