There are many reasons why people should consider the services of a wealth manager (or re-evaluate the one they may be using). Many people think they don’t qualify for wealth management services, when, in fact, they fall well within the range where professional help with their finances is warranted; people equally believe that changing adviser is harder than it actually is.
Engaging a (new) wealth manager can make all the difference in meeting your financial goals, whether that is for your investments, retirement or tax efficiency – perhaps all three!
Here, we’ve drawn up a list of common signs that you need a wealth manager – or a better-suited one – based on the reasons why affluent individuals come to findaWEALTHMANAGER.com.
1. Seeking alternatives to DIY, as it’s tricky keeping track
Some say a good portfolio can be constructed from as few as 15 stocks, but many portfolios have become more complicated over the years. Just keeping track can be real chore, and that’s without factoring in diversification and risk management requirements. Volatile times are when many people finally decide the stakes are too high – and the stress too great – to carry on managing their investment portfolio themselves.
A wealth manager will give you a comprehensive overview of your investments and how they perform. They can then manage them in line with your objectives and risk-profile, or at least offer a strategic asset allocation tailored to your profile.
2. Unhappy client? It’s easier to change than you think
Relationships break down, we all know that. It’s important to review and compare your current relationship to make sure you are getting the level of service and investment performance you require, without paying excessive fees.
Since findaWEALTHMANAGER.com was established in 2012, the proportion of our users who describe themselves as “unhappy clients” has risen year on year. Comments we receive from clients include a lack of innovation and ideas from their existing professional; an inability to diversify their wealth; or the firm’s offering having remained static whilst the investor’s needs changed. We understand inertia, fear of the unknown or a simple desire to avoid hassle. But, it’s your money and it needs to work hard – so make sure it is! Make a change if it’s the right thing to do.
3. Retirement: you are approaching the pension contribution limit
The progressive lowering of the lifetime allowance poses problems for many affluent individuals. In fact, lots of savers could be sleepwalking into exceeding their limit even without further contributions and with investment gains alone. A fund valued near £890,000 today could breach the £1m mark in three years if it achieved a 5% growth per annum. But there are other ways to build pension security, and a wealth manager can explain how these work.
4. Tax: your tax bill is starting to hurt
Tax planning is an essential part of preserving your wealth, be it Income Tax, Capital Gains Tax or Inheritance Tax. Everyone knows about the tax advantages of ISAs and pensions, but there are lots of other strategies that a wealth manager can recommend to minimise your tax obligations. In fact, the government offers compelling tax incentives on certain investments – like Enterprise Investment Scheme vehicles and Venture Capital Trusts – which can help reduce your tax bill.
5. A windfall: you want a large cash amount used well
If you have recently come into some money via inheritance, a business sale or some other form of liquidity event, it can be hard knowing what to do with it for the best.
Capital preservation is the foundation of a robust wealth strategy, and it is vital that you take steps to ensure that as much of your new funds remain yours as possible. That means not allowing them to get swallowed by the taxman, lost on management fees or exposed to undue risks. The right wealth manager will devise plans that take into account any number of complexities, enabling you to increase your opportunities to grow your net worth and minimise your risk exposure .
6. Upping your investment game to stop missing out on opportunities
People exhibit a home bias in their investment behaviour because it’s easier to get a handle on your own market. But you have to look further afield to diversify your investments and maximise your returns. Also, though stocks and bonds are where most people feel most comfortable, alternative asset classes like hedge funds, private equity, commodities and real estate could all be appropriate. A good wealth manager will help you access the entire investment universe to maximise your wealth.
7. Wanting a better fit with an adviser who understands your goals
Affluent individuals often fall into the “time-poor, cash-rich” category. Having an adviser who knows your financial situation and goals – and who has taken the time to understand your risk-profile – can be invaluable. No one likes having to “tell their story” and get bounced around call centres. Most wealth managers will appoint a dedicated relationship manager who can stay with you over the years, providing tailored advice when you need it.
The decision on whether you use someone to help manage your investments will depend on both practical and personal considerations. You should bear in mind that it is quite normal for clients to transition through different types
of relationship. Some clients begin with an advisory relationship and then grant a discretionary mandate once they’ve worked with an investment manager for a few years; others start with a discretionary relationship, and then take over managing their investments after they retire and have more free time. There is even the possibility of splitting your overall wealth into smaller pots, which can be managed on individual lines. These are options you can discuss with your prospective wealth manager.
The investment performance figures contained in this piece are for informational purposes only and are not intended in any way as financial or investment advice.
We always advise consultation with a professional before making any investment decisions. Always remember that investing involves risk and the value of investments may fall as well as rise. Past performance should not be seen as a guarantee of future returns.