You don’t necessarily have to be “wealthy” to need a wealth manager explains Lee Goggin, co-founder of findaWEALTHMANAGER.com.
It’s of course to be expected that what constitutes “wealthy” changes over time. People used to aspire to being a millionaire, but research shows you need at least £10mn to be considered wealthy today. With house prices rocketing, especially in property hot-spots, it’s easy to see how that figure was arrived at.
There is irony here, however. You are almost certain to need a wealth manager well before building up £10million in assets. Furthermore, reaching the level of wealth you are targeting – in the timeframe you wish – may well depend on you engaging one earlier than you might think. Having your investments and tax liabilities managed efficiently will make all the difference to meeting your financial goals.
The institutions on our panel cater to all levels of wealth, from those who might consider themselves as “comfortable” through to the ultra high net worth. Many wrongly believe that they don’t qualify yet – despite the fact that they may already meet the criteria for several of the providers represented by findaWEALTHMANAGER.com.
So, while you may not feel “wealthy” just yet, that doesn’t preclude you from exploring what wealth management could do for you – whether you have existing investments or you are completely new to investing. Here are five key signs you should explore what a professional financial adviser could do for you:
1. You are approaching the pension contribution limit (or built a significant pot young)
The reduction in the lifetime pension contribution allowance poses a real issue for many affluent individuals. Lots of savers could be sleepwalking into exceeding this limit. Figures suggest that a pension pot of £72,000 could compound to breach the limit easily in 30 years – even if no further contributions are made. This means that those who have managed to build up a significant sum of money by their thirties might have to be looking at other savings routes already. ISAs are increasingly retirement savings route, but there are lots of other alternatives a wealth manager can explain.
2. Your tax bill is starting to really hurt
Tax planning is an essential part of building and preserving your wealth – be this income, capital gains or inheritance tax. Everyone knows about the tax advantages of ISAs and pensions, but there are lots of other strategies a wealth manager can recommend to minimise your tax obligations. In fact, the government offers compelling tax incentives on certain types of investment – like Enterprise Investment Schemes and Venture Capital Trusts – which can really get your tax bill down.
3. You’re a DIY investor and experiencing some investment vertigo and it’s really tricky keeping track
Some say a good portfolio can be constructed from as few as 15 stocks, but many people’s investments will be far more complicated. Just keeping track can be a real chore, and that’s without managing your investments with proper diversification and risk management. A wealth manager will give you a comprehensive overview of all your investments and how they are performing. They can then take over managing them in line with your objectives and risk profile if you wish, or at least offer a strategic asset allocation for your profile. Our guide The Cost of Managing Your Own Wealth Versus a Professional Manager explores this topic in more detail.
4. You’re missing out on investment opportunities
People generally exhibit a home bias in their investment behaviour – as well they might because it’s so much easier to get a handle on your own market. But you will probably have to look further afield to properly diversify your investments and maximise your returns. Also, although stocks and bonds are where most people feel most comfortable, alternative asset classes like hedge funds, private equity, commodities and real estate could be all be appropriate (depending on your level of wealth, objectives, time horizons and risk profile). A good wealth manager will help you leverage the entire available investment universe to maximise your wealth.
5. You need an adviser who really understands your situation and goals
High net worth individuals often fall into the “time poor, cash rich” category. Having an adviser on hand who knows your financial situation and goals intimately – and who has taken the time to really understand your risk profile – can be invaluable. No one likes having to “tell their story” repeatedly (or getting bounced around call centres either). Most wealth managers will appoint a dedicated relationship manager who can stay with you over the years, with their advice becoming more tailored as time goes on.
There are many other signs you need a wealth manager, with one of the most obvious and common being the sale (or imminent sale) or a business. There are also of course lots of people suddenly come into money, whether through inheriting or, more happily, winning the lottery. Wealth managers are used to dealing with people in all kinds of situations so there’s sure to be one that can help you achieve what you wish to.
You can start the process of finding a professional to manage your wealth by trying our smart online tool. Or, if you would like to discuss your situation further with our straight-talking team, please do get in touch here.