Call us at: 800.669.6780

Should Your Fiduciary Wealth Manager Always Do What You Want?


Should Your Wealth Manager Do What You Want?

What Happens If a Client’s Investment Style Goes Against Their Own Interests?

This a very common scenario:

A prospective client has a conversation with us. They are unhappy with their current wealth manager. They want better performance. They want to beat the market. They want something they’re not getting.

We ask a simple question in response:

What would happen if your financial advisor tried to achieve what you wanted – using your preferred methods – and failed? Would you then blame yourself? The answer usually is, “Of course I wouldn’t. You’re the expert, right?”

The oft-ignored reality about high net worth investing is that affluent investors don’t always ask for what is in their own best interests. When that happens, their wealth manager – if a true fiduciary – will tell them exactly that.

Case In Point Provided by the Coronavirus

Financial Advisor NapaFor instance, one prospective client, age 80 and with $14 million in liquid assets, was unhappy that his financial advisor was not achieving market returns. He came to us a couple months before the coronavirus crash hit.

Of his $14 million, he was living off income from only $2.5 million and wanted to beat the market with the remaining $11.5 million.

Here’s the problem:

Over 90% of financial advisors and the smartest money managers have failed to consistently beat the market over a five-year period. Over fifteen years, it’s even worse. Beating the market is the wrong goal, and is a topic we write about frequently.

Is it possible to beat the market in a given year? Of course. But to sustain that performance over a long period of time – which is what matters to almost everyone – you have to adopt a very high level of risk. In other words, you’d have to be willing to lose 50+%.

Do you see the problem?

To beat the market year after year demands too high of an investment risk. Your risk of losing big is greater than your chances of actually succeeding in eclipsing market performance over a long period of time.

Experienced wealth managers, those having gone through multiple market corrections and collapses, implicitly understand this. That’s why if your wealth manager isn’t advocating a strong wealth protection plan, they’re unknowingly exposing you to potentially HUGE levels of risk.

That’s why Our CEO and Co-founder, Hutch Ashoo encourages high and ultra-high net worth investors to call him if they feel financially vulnerable, if they’re spending too much of their night worrying about what might happen to the wealth they’ve amassed over a lifetime.

As a fiduciary wealth manager, with 30 years of experience, Hutch can offer you the peace of mind you want. (“Financial serenity” he calls it.)

The coronavirus market collapse – in which the market has already lost over 30% of its value in about a month as of this writing – perfectly illustrates our point about taking on high (and totally unnecessary) levels of investment risk.

Financial Advisor San Francisco

Imagine how this investor’s $11.5 million is doing right now, assuming he has continued to invest aggressively. Just by following the market, he may have lost over 30% of his wealth. If he was using a high-risk investment strategy, his losses could easily be 50%. At this rate, he would have already lost over $5 million of his $11.5 million. He’s down to $6.5 million, and the crash may not have bottomed out yet.

He would now have to gain over 76% just to get back to $11.5 million! In other words, at age 80 he may never see a portfolio statement of $11.5 ever again. Back in the 2008 crash, it took four years for the market to return to its previous high.

The point is – how would you feel if your financial advisor took your own advice and created an aggressive portfolio, only to see it lose 40% of its value when the market crashed? Safe to say, you’d be upset.

As a fiduciary, just because the client asks for something doesn’t mean we have to try to deliver it.

This is why Pillar Wealth Management turns some prospective clients away.

We will not violate our own principles simply to please a client’s short term wishes if we believe those wishes will hurt them in the long term.

We choose not work with someone who has unreasonably high-risk demands that, if we attempted to achieve them, would almost certainly lead to huge losses in the next market crash such as the one we’re in right now.

Want a Fiduciary Wealth Manager Who Really Acts in Your Best Interests?

The best fiduciary wealth managers may not tell a client what they want to hear, especially when it comes to wealth protection and maximization.

That’s why a quick call to Hutch Ashoo, CEO and Co-founder of Pillar Wealth Management may be in order. As an independent, fee-only, fiduciary wealth manager, Hutch’s 30 years of experience speaks volumes when it comes to advising high and ultra-high net worth investors on the best plan for their wealth.

Go ahead and click below to schedule a quick chat with Hutch.

Talk to a Fiduciary Wealth Management Expert

Financial Advisor San Jose