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How to shop for wealth management
Wealth managers help those individuals with a large amount of income and assets with estate planning, risk management, and capital gains planning. Private wealth managers are usually close to their clients and act as a custodian of their money. Having a lot of money is not easy to manage efficiently, and a wealth manager will help to ensure it is managed in the most efficient way possible.
How to compare wealth management firms?
When comparing wealth management firms, there are critical questions that need answering before selecting one to manage your money. Although there are many money management firms that offer great services, you need unbiased reviews to find one that is perfect for you. This guide compares the most important features, fees, and benefits to guide your decision.
In a nutshell, you should consider the following factors when comparing wealth management firms:
- Eligibility: Which clients do they specialize in?
- Products: What products do they offer?
- Cost: How much will their services set you back?
- Customer Care: How much personal attention will they provide?
- Track Record: How well have their investments performed historically?
Let's look at these and other factors you should consider when shopping for a wealth management firm.
How does the wealth management firm get paid?
In general, there are two primary ways a wealth management firm gets paid. They will either get paid directly from the client or from the investments. In some scenarios, it could be both.
When you pay a wealth management firm directly, there are generally two options. Clients will either pay a flat fee or one calculated as a percentage of assets under management.
Some clients prefer to have the investment company pay their wealth manager. This is most common with mutual funds and the payouts are based on the share class a client buys.
Is a lower fee always better when choosing a wealth management firm?
Before you choose the lowest priced wealth management firm, ensure that you compare apples-to-apples. One firm may charge a lower fee, but they also may have cut essential services and benefits to reduce their price.
When interviewing wealth management firms, it is important to determine what you find most important and ensure the firm you select has those qualities. Even if it means paying a little more. Remember, price is what you pay, value is what you get.
What are the firm's credentials?
Having proper securities licenses is crucial in the financial planning world. Unfortunately, just because someone earned their licenses in the past, does not mean that they are in good standing today.
Because the securities industry is tightly regulated, it is easy to verify the credentials of any employee of a wealth management firm. Research Review FINRA's Broker Check to review their background and the SEC's Investment Advisor Public Disclosures for their firm.
Many advisors at wealth management firms take additional steps to continue their education. The Certified Financial Planner designation is a prestigious certification because of its rigorous training and difficult exam. You can look up a potential advisor at the CFP Board to verify their membership.
What does their ideal client look like?
Even the best wealth management firms are not ideal for every client. While interviewing potential advisors, ask them what their ideal client looks like. How do they see you fitting in among their existing clients?
For example, if the advisor focuses on clients approaching retirement age, yet you are starting a family you may not be a good fit. You are focused on saving for retirement, setting aside money for a child's education, and applying for insurance to protect your income. Whereas their clients' need to preserve their nest egg and generate income in retirement.
Who will you be working with?
In some firms, the person you interview and sign up with may not be your primary point of contact in the future. You want to understand will you be working only with this professional or do they work with a team of people that handle everyday tasks and questions. Both options can be successful in handling your money. You just want to know how this wealth management firm operates so you can make an informed decision.
How frequently will we talk?
Communication is important in any relationship. This is especially true when someone is managing your life savings. Discuss their approach to communication and compare that with your needs. Once a plan is in place, conversations may not be needed on a regular basis. But when you are going through major life changes, ensure that your advisor is ready, willing, and able to offer the investing guidance that you need.
Picking your wealth management firm
With answers to these questions, you will be able to select a wealth management firm to handle your money. Continue reading to see unbiased reviews of the top wealth management companies available.