Even the most seasoned investor can stand to sharpen up their strategy and these top tips will serve as a useful reminder to the experienced and novice alike.
We consistently find that a significant proportion of the affluent individuals coming to findaWEALTHMANAGER.com are unhappy clients seeking alternatives – with such enquiries accounting for a fifth or more of our users at times. Spikes often occur when a big merger of firms comes about making them feel uneasy, or when market events makes investors feel like they could get better performance and service standards elsewhere. These individuals are invariably very glad they came to us to see what else is out there.
Consumers are ever more discerning and empowered today. Yet inertia remains a big issue in financial services because people fear that changing provider will lead to hassle, mistakes being made and maybe even additional expense. Incredibly, research indicates that people are more likely to get a divorce than change bank.
In reality, moving to a new wealth manager is likely to be far easier, quicker and free of stress than you might think. And, when you fully consider the benefits of finding a better fit, you may come to see making a change as a real “no-brainer”.
We see many sources of client dissatisfaction, but there are three red flags to watch out for which really signal a change is due:
The institutions findaWEALTHMANAGER.com works with are all committed to transparent, better-value fees. Elsewhere, some investors are being slapped with hefty management fees and suffering a heavy drag on investment performance due to excessive fees or their portfolios not being constructed in the most cost-effective manner.
There can be huge variation in fees, with some institutions charging four times more than their rivals. As much as 40-70% of an investor’s an investor’s real return can be swallowed up by management charges.
You could save a huge amount. But over the long term, even a relatively small saving in costs can make all the difference to meeting your financial objectives.
Complacency often seeps into relationships over time. So, even if your wealth manager has performed exceedingly well in the past, there may be a tailing off of returns.
Equally, a previously attentive adviser may let service standards slip once you are seen as “safe business”. This is bad enough, but a lack of effort to understand your evolving financial needs could become really risky.
Ask your wealth manager about their future plans for your portfolio. Do they only give you a high-level overview or go into precise detail illustrating the risks involved, as well as the potential rewards? A wealth manager that does the latter is clearly a better long-term bet.
It goes without saying that trust is the oxygen of wealth management relationships, but trust can easily be eroded once clients feel their needs aren’t coming first.
Don’t put up with a situation where you feel sales are front of mind or that your concerns are being brushed aside.
Good wealth managers are able to ask you the right questions, answer you promptly, provide lots of reassurance and put you at ease. They will pride themselves on being your trusted wealth advisor.
Now, let’s set aside some of the misconceptions that may have you thinking it’s better to stay with a wealth manager that’s just OK.
Wealth managers do pride themselves on forging long-lasting, personal relationships with their clients, and won’t want to see them leave. But a reputable one will respect client choice and never stand in the way of those who wish to make a change.
Good wealth managers work in the best interests of clients, with a transfer process that is simple, transparent and cooperative. Movement of clients is common for a variety of reasons, and your old firm should be happy to work with the new one to ensure that everything is handled smoothly.
Wealth managers wish to provide exemplary service right from the outset and will make your move as hassle-free as possible. Even consolidating multiple previous relationships can be surprisingly straightforward, our users have found.
With the appropriate permissions in place, your new wealth manager can arrange for the transfer of all your investments and history without bothering you further. They can also liaise with your former bank to arrange the movement of regular payments, both in and out, which is often a big concern.
Those fearing awkward goodbyes should also know that your new provider can effectively end the previous relationship for you, should you wish. If a client signs a letter of authorisation, the new wealth manger will write to the existing one confirming the client is moving and begin the process.
You may have read in the press about clients being hit with punitive “exit charges”, but these are very much the exception. You should only ever incur reasonable – and transparent – “costs of doing business” when changing provider.
There may be administrative fees associated with moving accounts, particularly for larger, more complex investment portfolios, but these should not constitute a barrier to exit – particularly when weighed against the potential to achieve improved investment returns.
There are certain procedures the regulator makes all wealth managers carry out for all new clients. Happily, however, the industry’s digitalisation also extends to things like identity and Anti-Money Laundering checks.
Most good wealth managers have invested in technologies which mean there is usually no need for clients to bring in their passports or household bills, and it is often possible to have an account up and running in no time at all.
Many advisers are even able to “onboard” clients out of the office on a tablet and could come to your home or office to open your account.
Wealth management has digitalised, like any other sector, and is no longer prey to the delays caused by a reliance on paper and post.
Depending on what is held in your investment portfolio, most transfers can be completed in just three to six weeks today. Direct equities and bonds are quick and easy to transfer (usually just a matter of days), while funds can take longer (two-four weeks). Offshore unregulated vehicles can take four to eight weeks due to the involvement of transfer agents and administrators
It may be, however, that a slightly staggered exit is best. Your new wealth manager will move your existing assets in the most efficient way, looking at current tax wrappers such as ISAs and pensions, and the costs of transfer or disposal. Occasionally it makes sense to liquidate holdings in a staged manner and transfer cash to the new provider.
It is good practice to regularly review your wealth manager in terms of their investment performance, fees and service standards, and compare them to other providers. There may well be a better deal or a more productive relationship out there for you.
Don’t let inertia – or misplaced fears – cost you enhanced returns and the peace of mind that comes from knowing your financial wellbeing is in the safe hands of a truly trusted advisor.
Our smart online tool provides a fast, free, no-obligation method to check the competitiveness of your existing wealth manager, and to connect with best-matched firms who could provide a compelling alternative.
Alternatively, if you would like to discuss your situation with our expert team, please get in touch.