Affluent Wealth Management: What Value Does It Offer?
The search for affluent wealth management firms seems to be a hot topic in investor circles, and for a good reason. Affluent or high net worth refers to wealthy individuals. There are two types of high net worth: HNW ($1 Million to $5 Million) and ultra HNW (exceed $30 Million). Firms like Pillar Wealth Management, which serve clients with $5 million to $500 million in investable assets, are often the option many knowledgeable investors turn to for financial consulting, investment management, and other such services. For example, our guide for individuals with more than $10 million in liquid assets explains how wealth managers can help affluent investors live the life they want. However, many people still have doubts about whether these services are worth it. We’re often asked:
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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.
• What is wealth management?
• Is wealth management worth it?
• How do you get wealth management?
• How can I find the best high net worth wealth management?
So, we’ve decided to answer all your questions in one handy blog! Let’s begin.
Table of Contents
What is Wealth Management?
When asked, “what is wealth management?” many people say that wealth management firms basically do the same work as financial advisors or investment managers at private banks or other institutions since they offer similar investment or money management services. However, that assumption isn’t as true as you might think. By understanding the difference between the two, we’ll be able to explain what exactly wealth management is and why it’s different.
Wealth management firms usually service high net worth and ultra-high net worth investors. They typically have RIA fiduciary wealth managers who assist their clients with a wide spectrum of financial services. Wealth management isn’t just about giving financial advice – it can transform a person’s whole financial life!
Wealth managers will provide holistic management of all aspects of your finances to help you attain your life goals.
Our hardcover book on “The Art of Protecting Ultra-High Net Worth Portfolios and Estates – Strategies For Families Worth $25 Million To $500 Million” provides more details on the comprehensive strategies deployed by expert wealth managers to protect the wealth of ultra-high net worth individuals.
At this point, you might be thinking that wealth management doesn’t sound too different from private banking or other advisory services. But there are many differences. Let’s explore them.
Is Wealth Management Worth It?
When you look at the surface-level definitions of what wealth management firms do, it’s understandable to assume that they offer the same value to affluent investors as other advisory services. However, we’re here to show you the in-depth reasoning behind why wealth management firms are usually a much better option for wealthy investors than private banking or other institutions.
By investigating the difference between your options, we’ll be able to answer the question: “Is wealth management worth it?”
Wealth Management Firms Offer Higher Levels of Expertise
Though most private banks offer the same services as wealth management firms (investment management, financial planning, investment advice, estate planning, tax planning, retirement planning, legal services, etc.), they often cannot provide the much-needed expertise in all of these areas.
Of course, some truly amazing financial experts at private banks can give you exquisite service in their field of specialty – there’s no denying that. However, these institutions are also places where most young and inexperienced advisors may get their first roles to study the profession. Most inexperienced advisors will only be doing what their supervisors ask of them, and you won’t get the expertise you were expecting.
The risk carried by high net worth or ultra-high net worth clients is far more than a regular investor. The larger your wealth is, the more at risk you are of incurring major losses. Handing over your wealth to inexperienced advisors is an unnecessary risk you don’t need to take.
But yes, with some ingenuity, you can find the financial experts you need at private banks, but even then, those experts are usually specialized in one aspect of wealth management service. They might be expert financial advisors or investment managers who only handle certain aspects of your profile.
Ancillary services like estate planning and tax advice won’t come from experts in those fields. The best professionals in those fields will be running their own businesses instead. The people used by banks for these services will almost never be the best in business.
Wealth Management Firms Offer Best-In-Class Expertise
At wealth management firms like Pillar Wealth Management, you can expect to get the best-in-class expertise for every financial service we offer. Our wealth managers use their expertise and 60 plus years of combined experience in investment management, portfolio management, and financial advisory to make sure our processes are geared towards meeting your goals and preserving your wealth.
Not just that, we also work with some of the top professionals in the industry to provide the expertise you wouldn’t otherwise get in the ancillary services. You can rest easy in the knowledge that your retirement planning, estate planning, tax advice, and other such facets of wealth management will be in the hands of seasoned experts.
You don’t need to ever worry about dealing with ten or fifteen people. Our wealth managers will coordinate all activities and make sure your life is stress and hassle-free. Ready to live a life of financial serenity? Get in touch with us for a free chat today.
Wealth Management Firms Offer Higher Levels of Personalization
The reality here is that most advisors at private banks and larger institutions will have a large number of cases to manage because they’re unlikely to say no to anyone who approaches them.
Due to the huge number of cases, they’re unable to give you the attention and customization required for optimal portfolio performance. Even if they want to help create personalized plans for you, they usually won’t be able to due to the work pressure they are under.
Eventually, your money will be channeled into the same investments as their other clients. Many institutions may have a number of pre-designed plans that they fit you into. These plans may do well (sometimes) for the average investor, but they are not good enough for high net worth and ultra-high net worth clients. You can learn more about why traditional plans don’t work for investors with more than $10 million in liquid assets through our special guide.
Pre-set plans don’t take into account your personal life goals or priorities. They aim to make a certain “return” per year, which they don’t always do. Plus, they carry an unnecessary level of risk that you don’t need to take on right now.
So, how do wealth management firms fare in terms of personalization? The best wealth managers will approach their clients by asking them first about their goals and create plans to facilitate them.
At Pillar WM, we use comprehensive lines of questioning to gauge your future life goals and understand your priorities. We then use those goals as the anchor for our affluent wealth management strategy to make sure you can both minimize your risk AND optimize your portfolio performance to your requirements. You can learn more about our portfolio performance optimization strategies in our guide here.
Wealth Management Firms Employ Fiduciary Managers
Fiduciary managers are financial managers who have an obligation to make decisions with your interests in mind without influence from any other conflicting factors. Fiduciary managers are usually Registered Investment Advisors (RIAs) accredited by the SEC. The SEC enforces a strict code of ethics on fiduciary advisors to ensure that they only represent their client’s goals.
Most advisors and managers at large banking institutions are not fiduciaries. The advisors have to serve a set of different interests. Their employer’s bottom line, their own goals, and their supervisors’ wishes are just some of the things an advisor at a large financial institution may need to deal with. You can choose your own advisor, either a human financial advisor or Robo advisors (a term that refers to a digital platform that is equipped with algorithms) to help you get your best opportunity to manage your financial assets.
A lot of companies will place unrealistic quotas on advisors to get a set number of clients through the door. Therefore, even though the advisor wants to do their best for you, they will have the firm’s interests to contend with and try to bring in as many clients as possible.
You won’t find such conflicts of interest with fiduciary advisors. Other things you won’t find with fiduciary advisors are any commissions or product-based compensations. These kinds of fee structures are a potential conflict of interest, and most experts will advise you to steer clear of places that charge commissions.
Companies like Pillar WM will only employ fiduciary advisors that have your best interests at heart. We are a fee-only advisor for individuals who have $5 million to $500 million in investable assets, and we do not make our money any other way than with the annual fee. Want to learn more about how fiduciary managers are essential? Check out our guide on financial advisors here.
How Do You Get Wealth Management?
Now that you understand why wealth management firms can offer exquisite value to wealthy investors, you might be wondering “how can I find the best high net worth wealth management?”
Fortunately, we’ve got an easy-to-follow list of requirements you should look for to find the top wealth managers.
No amount of textbook knowledge or supervisor instructions can replace the value of true experience. Wealth managers who have a track record of excellence in working with high net worth and ultra-high net worth clients are the ones you need to look for. These managers realize that every investor has different priorities and always works to personalize their plans for every individual. Some will look for a company that has managed millions or more Assets Under Management (AUM) of their clients.
Pillar Wealth Management experts have more than sixty years of joint experience in working with clients who have $5 million to $500 million in investable assets. We work with you to establish your life goals and use our knowledge and experience to create a suitable plan for them.
Want to learn why our experience is important? Schedule a free chat today through our website.
2. Cost and Tax Reduction Plans
One of the main issues we see with clients who come to us after bad experiences with other financial advisors is that of pesky costs.
These costs are like a plague that slowly (and sometimes really quickly) saps away at your wealth while you’re unaware. These unnecessary and avoidable costs can be a real thorn on your side. They prevent you from achieving the best possible portfolio performance and reduce your wealth. You can learn more about maximizing portfolio performance in our simple guide.
We see too many advisors who are unaware of the difference between costs and fees – either due to a lack of knowledge, experience, or both. Hidden costs like internal expenses, bond sale spreads, margins, etc., can be very detrimental to your portfolio.
Always ask a potential wealth advisor about how they plan to cut down on your costs and how they plan to identify them. If you can’t get a straight answer, make a run for it!
3. Risk Minimization Strategies
While diversification is important, it is not the be-all and end-all of risk minimization. We see this mistake being made way too often. Advisors and investors often believe that diversifying an investment portfolio is enough to minimize their risks. As an affluent investor who potentially has a lot to lose, you need to do better than this.
Pillar Wealth Management believes that having a correct and consistent asset allocation is often more important for mitigating risk than diversification. Your portfolio will be better suited to riding the economic downturns when you optimize your investment ratios in cash, bonds, and equities.
A great asset allocation may still not prevent losses (no one can guarantee that), but it will certainly reduce the impact of any unfavorable circumstances. You can find more information on the importance of asset allocation and other portfolio optimization strategies here.
4. Investment Rebalancing Capabilities
The top wealth management firms have effective processes to rebalance your investments in order to maintain optimal ratios between cash, bonds, and equities. The optimal ratio is always determined in accordance with your life goals.
In this regard, Pillar Wealth Management deploys the use of an Efficient Frontier. It works in the following manner: when your investment ratios move too far away from the Efficient Frontier, they aren’t producing the best returns possible. You’re being exposed to more risk than the returns you’re getting.
Our experts use the Efficient Frontier to constantly rebalance your investment in a way that makes sure to optimize returns and goal attainment. Want to learn more about how our performance-tracking processes work? Get in touch with us for a free consultation.
The top wealth management firms stand distinctly apart from all competition when it comes to serving the needs of high net worth and ultra-high net worth clients. Their personalized consultations and careful management make them a must-have for many investors. Use the tips in this article, and make your choice wisely.
If you’re an investor with investable assets between $5 million and $500 million, Pillar Wealth Management can help you live a life of financial serenity and attain all your life goals. No need to wait, visit our website and get in touch with us for a free consultation, and we’ll explain how our services can help.
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.
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