Choosing a wealth manager is not just a binary choice between big brands and boutiques as there are a whole spectrum of providers out there. Thinking about your preference for big versus small is a great way to start the process of exploring your needs, however.
Whether the size of a wealth manager impacts the quality of relationship they offer is a perennial question which is pondered equally by experienced and new clients. Recently though it has been coming up more and more in our conversations with users.
This is a philosophical question to a degree no doubt, and one of personal taste too that is difficult to unpick. However, there are a few key factors which might help you to narrow the field.
The price is right?
Driving much of the debate around choosing wealth managers has been media coverage focused on the fee changes which are being made in response to the FCA’s recently introduced Consumer Duty rules. In short, these require firms to show that they are delivering good value to clients on an ongoing basis and as a result some have had their fee structures really put under the microscope – and perhaps been found wanting.
Among other offenders, the UK’s biggest (albeit quite ‘retail’ flavoured) firm has reportedly been charging upfront fees of 4.5%, recurring advisory fees of 0.5% (which may have not translated into a huge amount of work for regular clients) and then initial and ongoing product fees and transaction costs besides. As many commentators rightly pointed out, this is sufficient to cancel out any gains for a number of years.
Driving much of the debate around choosing wealth managers has been media coverage focused on the fee changes which are being made in response to the FCA’s recently introduced Consumer Duty rules
The fact is brand power can often result in complacent pricing. That is true in any sector, but particularly so in those where trust is imperative and people might be prepared to pay more for a familiar name – like financial services. However, scale can bring economies of scale and it can equally be the case that big institutions choose to use their heft to bring costs to consumers down as far as they can.
Coverage outside the capital
Costs aside, investors also have to consider geographical coverage – although perhaps not to quite the same extent as they once did due to virtual meetings now being a possibility. That UK wealth is somewhat concentrated in London and the Southeast means firms with only one office will typically have chosen to base themselves in the capital (although there are regional firms which stay close to their roots, of course). Whether you will be happy to travel to see your wealth manager over potentially many years is a key question.
Costs aside, investors also have to consider geographical coverage – although perhaps not to quite the same extent as they once did due to virtual meetings now being a possibility
The bigger UK (and global) brands often have a very wide networks of offices, however, so that they are well placed to serve all of the centres of British wealth. You may be able to find an adviser very close to home, yet that might not matter to you at all today given the popularity of video conferencing over in-person meetings. If location is important to you, just let us know when completing your wealth manager matching questionnaire.
Top Tip
People frequently ask me what my ‘favourite’ wealth manager is or which institution I would advise a lottery winner to choose. That is a tricky question to answer since there are so many firms which are simultaneously very different but which offer comparably excellent standards across service, performance and fees.
As this piece emphasises, the choice often comes down to your feelings about a particular organisation or a proposed adviser, all things otherwise being equal factually. We can set up meetings with a shortlist of best-matched providers fast and free if you already know which kind of relationship you seek. Alternatively, get in touch for an informal chat so we work out exactly what you need.
Lee Goggin
Co-Founder
Capabilities and the feeling factor
A third big consideration is the service and/or product offering itself and how the wealth manager operates as a platform for holistic solutions. While you might think that ‘bigger is better’ for those with very high levels of assets, for instance, the fact that the ultra-wealthy often prefer a boutique or family office approach undermines this assumption. At the same time, the Ultra High Net Worth often work with the biggest global houses for the range of solutions and larger credit lines many are able to offer.
While you might think that ‘bigger is better’ for those with very high levels of assets, for instance, the fact that the ultra-wealthy often prefer a boutique or family office approach undermines this assumption
The situation in the ‘core’ wealth management space is analogous. While the biggest firms can and do deliver great service, they may not be able to be able to provide quite the same emotional resonance as a small but beautiful boutique where everyone really does know your name. As several clients have said to findaWEALTHMANAGER.com over the years, the choice can feel like it is between ‘being a small fish in a large pond, or a large fish in a small pond’. Each firm’s offering needs to be weighed
Right-sizing your relationship
When it comes to the size of wealth managers and comparing boutiques to behemoths, there is clearly a lot to be said on both sides of the debate and no clear-cut answers (unless there is something really that you need which only a large firm can provide). As a result, we would advise something like a weighted decision-making framework which takes into account all the relevant objective factors but which can also accommodate your subjective feelings too (and here don’t neglect the feelings of your spouse or partner either!).
We would advise something like a weighted decision-making framework which takes into account all the relevant objective factors but which can also accommodate your subjective feelings, too
Those who are undecided should consider comparing two very differently sized wealth managers, having already ascertained that both can offer all the services they need. This is the point of our matching service in essence: we filter the market to find factual matches, so you can make a final decision based upon which institution feels like the best relationship fit for your needs.
Important information
The investment strategy and financial planning explanations of this piece are for informational purposes only, may represent only one view, and are not intended in any way as financial or investment advice. Any comment on specific securities should not be interpreted as investment research or advice, solicitation or recommendations to buy or sell a particular security.
We always advise consultation with a professional before making any investment and financial planning 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.
