Robust wealth management combines protection, growth and tax mitigation, and there is typically a lot more that could be done to improve the health of your wealth.
As might be expected, many of the investors coming to findaWEALTHMANAGER.com are dissatisfied with their current provider and seeking a better match – and you should never let misconceptions about hassle and costs can stand in the way of a change.
It is very easy to fall prey to inertia with a wealth management relationship and all too often investors stay with an institution that is under-performing because they fear making a change will be too much bother, or cost too much. But with an abundance of top-quality providers out there competing for your business, you should never be content with a failing partnership, or even one that is merely good enough.
You may have a lot to gain from a changing your wealth manager, so here are some “red flags” signalling you should perhaps look elsewhere and reasons why your mind should be at rest over the transfer process itself.
Investors may not know, for example, that the new wealth manager will liaise with the old one via a letter of authorisation from the client, meaning that they don’t even have to have the awkward “leaving you” conversation.
There are a variety of drivers behind an investor coming to findaWEALTHMANAGER.com to seek a new provider. Sometimes the relationship reaches a crux point suddenly – because the institution changes ownership or an adviser departs, for example – or it may have been deteriorating for a while. Client dissatisfaction tends to focus on four key areas, however:
One – or a combination of these red flags might come up – at any point, so it pays to keep your freedom to change provider in mind throughout any relationship, even (and perhaps particularly) in a longstanding one. A small reduction in fees could impact hugely on the long-term performance of your investments; a better personal relationship could make you feel far more comfortable with your financial affairs; or there may be new services such as a Lombard loan that might greatly enhance the impact of your wealth.
The prospect of change can feel unsettling, particularly when there is such a wide choice of money managers available. However, having used the FWM smart online tool, you can be confident knowing that the shortlist of institutions our matching process generates will all be a very strong fit indeed.
Then, once you have met with your best-matched wealth managers and identified the right one for you, you can be assured that the transfer process itself will entail very little in the way of hassle and costs – and could be completed very rapidly indeed.
Here, leading wealth managers from our panel put paid to four common misconceptions about changing provider.
Here, four key myths are put to rest:
1. Your old provider is highly unlikely to be obstructive
Although wealth managers pride themselves on the personal and durable relationships they forge with clients, good ones will never stand in the way of those leaving.
Whilst naturally companies do not wish to see their clients leave, it is important that they respect client choice and give them the freedom to do so by making the transfer process simple and transparent, says Gary Teper, Head of Investment Management at Charles Stanley. Where possible, we always endeavour to work with the other party involved – whether this be a client transferring to or from us – to ensure it is handled smoothly and that we are all working in the best interests of the client.
2. There needn’t be any hassle (or difficult goodbyes)
A new provider will minimise any hassle and can effectively end the previous relationship for you, should you wish. Even consolidating multiple previous relationships can be very straightforward.
Part of our discussions with prospective clients is to work out the most efficient way to transfer the existing portfolios – looking at current tax wrappers such as ISAs, investment bonds and pensions, costs of transfer or disposal, and sequence of transfer – so that once the transfer process is underway it should be pretty smooth, says David Carroll, one of the founders of Seven Investment Management.
We recommend opening the new account first, then we obtain a detailed full authority from the client that enables us to arrange everything and this almost always allows us to complete the move without having to bother the client further” adds Mike Packham, Business Development Manager at SGPB Hambros. For example, we liaise with the former bank, arrange movement of regular payments both in and out – which is often a big concern – and the transfer of investments, along with any important CGT history and so on.
3. The cost of moving may be minimal
Recent media coverage has focused on the punitive exit charges the clients of some investment managers have experienced, but this is very much the exception. Instead, you can expect reasonable (and transparent) “costs of doing business”; sometimes, the new firm may even defray some exit costs.
Of course there are administration fees associated with moving accounts – particularly for larger, more complex portfolios – but we seek for these fees to be reasonable and not to be a material ‘barrier to exit’, says Teper. “We are here to serve the client – at the beginning, throughout and at the end of their relationship.”
4. Digitisation has slashed delays and complete portfolio transfers can be surprisingly quick
The digitisation of financial services means relationships can be wrapped up and begun elsewhere in short order. New accounts can be opened as soon as client checks are complete and even complex portfolios transferred in a matter of weeks.
As with all sectors, reliance on paper and post did used to cause delays, but more recently operations systems have been developed that substantially speed up the transfer process with minimum hassle for the client, says Teper.
We know how agonising paperwork can be, and try to reduce the pain as much as we can, adds Giles Rowe, Chief Executive of Henderson Rowe. Technology helps greatly and we use Smartsearch for Anti-Money Laundering checks for example, so there is usually no need for clients to bring in their passports or get a notarised signature on a copy of it, and no need to dig up electricity or other bills.
Clients will therefore find things progress far more quickly than they might fear. Most transfers are completed in around three to six weeks depending on what’s held in the portfolio, with portfolios of individual shares usually quicker than portfolios of funds, says Carroll.
Finally, bear in mind that your investments might mean a slightly staggered exit is best – but this still won’t take long.
Occasionally it makes sense for the incumbent to liquidate holdings in a staged manner and transfer cash to us which can be quicker and more efficient, says Kate Leppard, Deputy Head of UK Wealth Management at Cazenove Capital. Direct equities and bonds are quick and easy to transfer (a matter of days), while funds can take longer (2-4 weeks), especially offshore unregulated vehicles (4-8 weeks), where we are in the hands of the transfer agents and administrators.
In summary, while it might be easy to stick with the status quo, you may have nothing to lose and a very great deal to gain through changing your wealth manager – and the process could be a lot quicker and painless than you previously imagined, even if you have multiple accounts.
Are you looking to change wealth manager? You can start the process of finding a better partner 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.