Have you been struggling to efficiently manage your everyday life and investment portfolio at the same time? Are your investments giving you too much stress? You might need a personal investment manager who can take the burden off you. If you are choosing an investment manager,read our exclusive $10 million+ investor’s guide. It provides enough insight to let people know which financial advisors provide the best value to affluent investors.
The best and most experienced investment managers don’t just work with anyone. They usually serve an exclusive set of affluent investors. For example, Pillar Wealth Management only provides its services to a few individuals with $5 million to $500 million. We do this to make sure you get the customization your wealth needs. We don’t want to cut corners. You can get more information on our strategies via a free face-to-face chat.
For individuals who aren’t quite convinced of the value provided by a personal investment manager, we’ve created this article to answer the following questions:
- What is a personal investment manager?
- Why do you need a personal investment manager?
- How can a personal investment manageradd value to your life?
Table of Contents
What is a Personal Investment Manager?
A personal investment manager is a professional financial advisor that manages all aspects of a client’s investments. They make investment plans, execute transactions, and monitor your portfolio according to your needs and goals.
An investment manager’s services often come in two types: in isolation or as part of a whole wealth management package. For affluent investors, we usually recommend that they go for a holistic wealth management service that manages all aspects of their financial life.
A personal investment manager’s role is to help you create and maintain an investment portfolio that enables you to live the life you want, the way you want to.
Why Do You Need a Private Wealth Advisor?
Most affluent investors say that they’ve been managing their wealth and investments throughout their life quite well, so why would they need a personal investment manager now? It’s a very valid concern because, of course, these services don’t come for free.
Even though you don’t necessarily need a personal investment manager for high net worth or ultra-high net worth clients to be successful, they give you a better chance. Their experience and expertise in this field isn’t something that should be taken lightly. They know all the right steps to take when things go bad. They know how to remove emotion from their decisions.
Plus, do you really want to spend hours monitoring your investments? Or would you rather go out and achieve your lifestyle dreams? The biggest benefit of an investment manager is that of convenience. You have the freedom to do whatever you want with your time because you know that someone reliable is already managing your money.
For more examples of how wealth managers have helped ultra-high net worth people live better lives, get our hardcover book: The Art of Protecting Ultra-High Net-worth Portfolios and Estates – Strategies For Families Worth $25 Million To $500 Million.
How Can a Personal Investment Manager Add Value to Your Life?
Whenfamiliesworthover $10 million read our exclusive guide, they’ll find all sorts of information about the various kinds of financial advisors that provide investment management services. Our experts have found that wealth advisors are the optimal choice for most high net worth and ultra-high net worth families.
However, the question still remains on how a personal investment manageror wealth advisor can truly add value to your life as an affluent investor.
The Right Goals
This may seem like a very vague claim, but its significance cannot be understated. The ability to gauge the right goals for clients is a skill that can only be found in a select few personal investment manager services. That’s because the ability to ask the right questions and get the right answers is not something an advisor can learn overnight.
The usual line of questioning used by a lot of financial advisors goes something like this:
“What returns are you aiming for?” or “What is your risk tolerance?”
These are usually the template questions you’ll find being asked at many places. But why is this an issue?
The problem here is that these questions ask for very arbitrary answers. There’s no way for you to immediately know what your optimal return percentage is. Calculating that is your investment manager’s job! Any number you come up with will be plucked out of thin air and will only pressurize you into feeling like you have to earn a certain level of return.
As far as risk tolerance goes, you can’t define that with confidence either. The question is just not right. Your risk tolerance can change by the day. If today you’re feeling confident about all economic conditions or are in a good mood, your risk tolerance may feel higher. However, it may be lower the next day if you, for example, fall sick. Plus, no one would want to risk losing their wealth just to make a few more returns.
The reality here is that your goals neither revolve around an arbitrary return value nor a risk tolerance level. Both of these things are decided after your goals have been gauged! When you hire an experienced personal investment manager for high net worth investors, you’ll get someone who understands that your goals and priorities are about your lifestyle, legacy, achievements, etc.
How an Experienced Personal Investment Manager Establishes Your Goals
For companies like Pillar Wealth Management, this stage is of the utmost importance. As fiduciary managers, we put your goals and priorities over everything else. Our experts comprehensively study all aspects of your life and take an in-depth survey to understand what you want to achieve with your money.
We look at things like:
– Family circumstances
– Your health and your family’s health
– Retirement aspirations
– Pursuits you care for
– Current pending disputes or deals
– Value of time and money
– Current and future income sources
Once we’ve gone through the detailed process, we can set your life goals. These goals then become the foundation of all our next steps. From here, it’s easier to understand the sort of portfolio performance you need to be happy and feel fulfilled. Notice the vast difference between the questions mentioned at the start and the process we use. Read our guide to learn more about how we help investors shift perceptions.
The value of true financial serenity cannot be understood until you personally experience it, and you won’t achieve this state by only chasing the highest returns. As with all things in life, effective investments call for the right balance. Our guide on portfolio performance details exactly how and why chasing the highest returns does not provide sustainable success in the long term.
Think about this: would you rather risk losing most of your wealth just to earn an extra 2% return, or would you want to make sure that your investment performance is enough to both minimize the risk of losing your wealth and assist you in living the life you want.
Almost every affluent investor only wants financial security. This means that their investments provide them with enough income or that they have sufficient money to achieve their lifestyle goals. For high net-worth and ultra-high net-worth investors, a personal investment manager that manages returns and risks to provide performance that ensures financial security is of tremendous value.
Financial security is when an investor can confidently say that “my portfolio earns $35,000 every month without putting my wealth at risk.”
Financial serenity is a concept that goes beyond financial security. Like Pillar Wealth Management, a truly experienced personal investment manager makes sure that clients don’t even have to think about their finances or investments. They can live their life stress-free while everything is handled for them. Ready to start a financially stress-free life? Schedule a free discussion with us.
A Financial Plan
The concept of financial security or financial serenity could not be achieved without a financial plan. This personal investment manager service is an integral part of the overall process. It’s a tool that allows your advisors to create a roadmap that balances your risks and returns for the optimum performance.
A financial plan forces your risk tolerance to equate with financial security. It’s very difficult to make that happen without one. Without a financial plan, you’re just moving around based on gut feelings. When emotions come into the investment process, feelings like anxiety, uncertainty, and fear start to take hold. They make you panic and lead to a phenomenon called the “hindsight bias.”
An investor with hindsight bias believes that they have learned from their previous mistakes regarding market volatility after studying their data. Though this may not sound too bad, we’ve found that it often causes investors to make worse decisions. Decisions made with emotions will rarely give you the financial security you seek.
At Pillar Wealth Management, our financial plans are fully personalized for each of our affluent clients. We know that while a conservative portfolio might work for one person’s goals, another client may need a more balanced or moderate approach for what they want to achieve, even if each of them has the same amount to invest.
Want to know what your very own customized financial plan looks like? We’re a personal investment manager for high net worth and ultra-high net worth clients that can help.
A Cut Down on Avoidable Costs
For readers of our ultimate financial advisors’ guide that provides details on the habits of poor advisors, these cost questions ring alarm bells. We feel that a personal investment manager is only as good as their ability to identify and remove unnecessary costs that erode performance gains.
All the things we mentioned earlier – portfolio performance, financial serenity, risk minimization – will be worthless if extra costs erode your performance gains and wealth.
Here are the five costs every effective personal investment manager or wealth manager should eliminate.
1. Performance-Based Fees
While performance-based fees seem fairly harmless on the surface, they can have some unsavory effects on your portfolio. Performance-based fees refer to a bonus paid to investment managers when they reach a certain level of return for your portfolio.
The issue here is that these fees provide an incentive to your manager to be as aggressive as possible. Rather than prioritizing a balance of risk and return, your manager would be motivated to make the highest return possible. By now, we know how damaging that can be.
2. Internal Investment Costs
Internal investment costs can be a tricky one to avoid, and this encompasses exactly why having a fiduciary manager is so important. These types of costs are usually hidden in the fine print that nobody reads.
They usually start to pop up when you start availing extra services from your investment company. If your standard option involves investing in stocks, you might take up an offer from the company to expand the portfolio to other securities. Once that happens, you may find that you’ve been charged a much higher fee for this extra service than you bargained for.
3. Margin Interest Costs
Margin interest costs also present a very frustrating case and are a trap that many investors fall into. Once again, they show us the importance of hiring a fiduciary personal investment manager service that doesn’t entertain conflicts of interest.
Some non-fiduciary services allow their clients to borrow cash against their wealth or assets. While this allows you to free up some cash, you also have to deal with two major problems:
- Interest charges on the cash loan
- More money under your manager’s control, which means that advisor fees are higher
As you can see, there are basically two costs attached to one cash loan. Avoid these.
4. Bond Spread Investment Costs
A bond spread is also a cost you can avoid by making the right choice of hiring a personal investment manager.
Services that make money on bond spreads do so by using the difference between the bond’s buy and sell price. Choose a fiduciary advisor to make sure they can identify these costs and get you out of them.
5. Tax Loss Cultivation
This is an essential personal investment manager service. It has the potential to save you a bucket load of money on the already high taxes you’re paying.
Tax loss cultivation occurs when a clever wealth manager constantly monitors your portfolio. They can use the losses of some stocks to counterbalance the realized gains of other stocks in your portfolio. This allows you to save a lot more money on taxes.
By choosing the right investment manager, you can also benefit from this tactic.
From helping you establish your goals to providing financial serenity, the right personal investment manager can be your best tool to achieve your lifestyle dreams and live without stress. While some people can manage their investments themselves, most investors will need an experienced professional’s expertise.
Are you an individual with $5 million to $500 million who has a set of financial and lifestyle goals to achieve? Pillar Wealth Management has fiduciary wealth managers that can help you streamline everything and achieve the portfolio performance you need. Start your road to financial serenity by startinga free chat with us.
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