What Does Holistic High Net Worth Wealth Management Look Like in the San Francisco Bay Area?
See Why Big Investment Firms Can’t Deliver What You Really Want
No matter where you live, if you’ve spent any time exploring the idea of working with a wealth manager, you have no doubt experienced what we call cookie-cutter wealth management.
For young investors with hardly any assets just starting out at the Schwab, Fidelity or robo-advisor level, cookie-cutters are fine. But for high net worth families – especially those living in the high-priced San Francisco Bay area – your finances and future plans simply don’t fit into standard checklists and fill-in-the-blanks.
Yet, that is what far too many experience. The reason so many experience this is because so few wealth management firms offer holistic wealth management services. They haven’t adapted their processes to the unique needs of their high net worth clients. Let’s face it – your life and your finances have little in common with the vast majority of people.
Many people worry about paying the rent each month. People like you worry about whether to raise the rent.
You’re simply not facing the same financial reality as most people.
That being true, why do most big investment firms and even independent wealth managers in places like San Francisco, Palo Alto and Walnut Creek approach your financial planning using the same processes they use for a 30-year old who’s still paying off his college debt?
Holistic wealth management looks very different, and you know it when you experience it. Deep down, it’s what you expect to experience, because you know it’s what you need as a high net worth individual. But most of the time, what you actually encounter leaves you uninspired and let down.
You’re about to see what holistic wealth management looks like, and what it does not – what you’ll experience with almost every big investment firm and independent financial advisor.
Let’s begin with what it does NOT look like.
The Big Investment/Bank Blueprint for ‘Wealth Management’
When you sit down to talk with representatives from Schwab, E-trade, Fidelity, and other large firms, what they’ll do is take you through their standard process.
Their process will likely include:
- The same formulas they use for most other clients
- Blanks to be filled in
- Checkboxes to check
- The same questions they ask everyone else
- Gathering your relevant numbers, like savings, debt, mortgage, investments
- Inputting your data into a computer
- Telling you about their great service and all the reporting you’ll get (which is all automated – they want to talk to as few people as possible)
- Projections about how your investments will perform over 20-40 years at average market growth rates
At these large firms, your life must be contorted until it fits into their paradigm. Your finances must be crammed in to their pre-determined procedures. Anything outside of that gets noted and acknowledged respectfully, but it doesn’t really change what they fundamentally do for you.
What Most Firms Cannot Do
They can’t answer your biggest questions
Should I really retire at age 50 and sell my business?
What strategies can help me reduce my overall tax burden?
What steps remain to better secure my estate?
How does my real estate and debt affect my retirement and what should I do with them?
How much should I set aside for unplanned future major expenses?
Will my passive income and investment growth be enough to sustain my lifestyle, for the rest of my life?
What should I do with my annuity and whole life policies?
Filling in the blanks and checking off boxes doesn’t provide nearly enough information an advisor would need to answer these sorts of questions.
But these are the questions that matter the most!
If your investments are projected to earn 6% with a lower risk allocation and 9% with a higher risk allocation, what does that really mean for you? Which scenario makes more sense given your unique situation?
When you ask questions like this, most big bank ‘advisors’ (they’re really not much more than glorified tellers) will shrug, get that thoughtful look on their face that people get when asked a question that’s too difficult, and find a way to tell you that it depends on your own preferences and judgment.
“It depends” is the easy way to avoid answering all difficult questions.
Another good one – “It’s hard to say for sure.”
But wealth management doesn’t do you much good if it can’t answer these sorts of questions. The wealth manager who can answer them – such as Pillar – has developed a holistic process for wealth management and retirement financial planning.
‘Holistic’ means, our process encompasses everything, and every question that matters to you must be answered, using real data.
They can’t tell you how to respond to market volatility
What happens if the market craters right after you retire? What if it stays down for many years in a row? What if it rides a rollercoaster for ten years, barely gaining over a prolonged period?
All of this has happened – in our lifetimes.
When things happen outside your control, how should you respond?
Here’s a quick 3-step response to market volatility
If things go wrong at the worst possible time, do you know what adjustments you should make in your portfolio? If you were planning to buy or sell real estate, should you still go through with it? Should you adjust your estate plan? Should you adjust your lifestyle?
How do you know?
“It’s hard to say for sure…”
Almost no wealth managers or big investment firms in Silicon Valley will be able to definitively and specifically answer questions like these, when the timing is most critical. Waiting too long to act in time-sensitive situations can cost you millions in lifetime earning potential.
You need a wealth manager with a holistic process who can activate immediately when something drastic affects your life and finances. You need someone who won’t tell you that it depends and that it’s hard to say for sure what you should do.
What good is that?
How Holistic Wealth Management Looks
A holistic wealth management process doesn’t begin with numbers. It begins with planning. With questions about your hopes and dreams for the future.
Is your number one goal to retire at a specific age?
Then let’s build your plan around that. Why waste time creating a plan that assumes retirement at 65 without relocation if you really wish to retire at 55 and move to Napa? The fresh-faced advisor at the big investment firm will squirm and fidget when you start tossing atypical, non-standard goals like this at him.
At Pillar? We expect it, and in fact we encourage it because high net worth and ultra-high net worth clients are the only people we work with.
Here’s an idea of where the holistic wealth manager starts:
- Ideal age of retirement
- Ideal monthly income for the rest of your life
- Estate planning goals
- Tax ramifications of upcoming financial decisions
- Insurance and debt goals
- Lifestyle hopes and dreams – now and well into the future
A holistic wealth manager incorporates everything into the information-gathering and planning process.
Your real estate holdings, major expenses now, known major expenses in future, unknown major expenses (such as medical unknowns) , current monthly income, investment assets – all of this as well as your plans and hopes for the future comprise the foundation of any wealth management plan that will still be worth looking at even just a few years from now.
With all that in hand, then we can go about evaluating the risk tolerance that’s appropriate for you, and the investment plan that fits best.
See the difference here?
The investment plan comes last. Projecting what your portfolio will earn over the next 20-40 years has no use if those projections are divorced from the specific details of your life – now and in the future.
What Happens After the Plan Is Ready?
With all that information collated, along with your current portfolio information, other assets and income sources, we can then get to the fun part – creating a plan that is organically infused with the strongest possible financial security and peace of mind.
Here’s how Pillar achieves this:
1. Run 1000 Stress Tests on Your Portfolio
Our innovative process uses market performance data going back about 100 years. Other firms that use a process similar to ours often go back only 20, 30 or 40 years. Why does this matter?
Because in the last 100 years, the market has been through the Great Depression, multiple recessions and wars, inflationary periods, social upheaval, a great variety of tax environments, technological advances, and so much more.
Our data reveals how the market has performed through so much tumultuous history, often bearing the brunt of many powerfully opposing forces and events simultaneously. Using that data, we are able to confidently project how your portfolio will hold up when put to tests similar to – and even worse than – what we have seen throughout history.
We examine how the market, and your portfolio, will likely perform in 1000 different scenarios. Some are very extreme, such as a recession combined with a technological advance that eliminates large swaths of jobs (think that will happen sometime in the future?). Some are less extreme.
But all 1000 scenarios, together, show you how your portfolio will hold up against severe stress.
2. Project Your Status – Are You in the Comfort Zone?
Over the next 20-40 years, how will your portfolio hold up? The 1000 stress tests each produce a different result, because each test involves a different combination of forces. By themselves, each test reveals little value.
But what if your portfolio holds up and even prospers in a great majority of these high-stress test scenarios?
That’s the idea behind the Comfort Zone.
If your portfolio exceeds – not meets – your goals in 750-900 of the 1000 scenarios, we deem you to be within the Comfort Zone. This is the greatest level of peace and security you can be given regarding money. There’s always some uncertainty about money, but if your portfolio lies within the Comfort Zone, you can relax, knowing you’re taken care of.
3. Make Adjustments If Not in the Zone
What happens if your portfolio lies outside the Comfort Zone? Or what if, five years into this, you fall out of the Zone (we re-run all 1000 scenarios every quarter, so you will know if there’s any chance of a potential problem)?
In that case, we simply review your plan and make an adjustment in one or more of five possible areas.
- Reduce your spending
- Increase your savings
- Adjust how much you plan to leave your heirs
- Alter the timing of planned major expenses
- Adjust your risk tolerance and make appropriate changes to your investments
By tinkering with one or more of these five things, just like pulling a lever, you will change the results of the 1000 stress tests. With the right adjustments made, you’ll return to the Comfort Zone and can move on with your life as if nothing happened.
Are You In the Comfort Zone?
The only way to find out is to sign up for a free Wealth Management Analysis meeting.
In this meeting, you won’t be talking to a 20-something advisor still trying to hide their lingering acne.
You’ll be working with a San Francisco-based wealth manager with over 30 years of experience developing plans exclusively for high net worth individuals and families.
If you want complete, comprehensive, holistic wealth management and financial planning, your first and only step is to attend a Wealth Management Analysis meeting.
The big investment firms, banks, discount brokers, and most other advisors can’t offer you anything even close to this. If you don’t believe that’s true and want to spend the time, feel free to sign up for meetings with a couple big banks too and then come to us.
You’ll see the difference almost immediately.