Posing these quick-fire questions to a shortlist of wealth managers will help you arrive at a good match quickly, much in the style of speed dating.
The UK financial advice market is actually one of the world’s most diverse and there are a plethora of wealth managers available to high net worth individuals.
Some are well-known brands, yet others are keep a very low profile indeed. Equally, while some wealth managers are divisions of global banking groups, others are purely investment managers very much on a boutique scale. Wealth managers vary hugely in the capabilities they offer clients and, in turn, there are also significant differences in the minimum amount of assets firms require to open an account for a client.
Choosing a wealth manager might be one of the most important financial decisions you make; your decision will be based on a range of factors, ranging from the firm’s investment process and style of servicing clients to its geographical proximity and level of technology innovation.
Using our smart online tool will set you well on the way to finding your best-matched wealth managers. findaWEALTHMANAGER.com’s unique matching methodology objectively determines your best-matched wealth managers from a panel representing firms, large and small, old and new, and independent and bank-owned.
During the next stage in the process – speaking to and meeting the prospective wealth managers – it is vital to assess a) whether the firm has the capabilities and expertise you are looking for and b) if the firm’s style of doing business feels like a good fit. Clearly, it is also essential that you can form a good working relationship with your adviser, so you must ensure that you are provided with an appropriate match. Don’t be afraid to ask to meet with several prospective advisers.
You should have the following questions in mind when assessing potential wealth managers. A good wealth manager will provide you with full answers to all your questions and will offer a detailed run-down of elements like their fee structure and investment process.
1. How safe is my money?
Understand exactly where your cash and investments will be held (wealth managers can sometimes offer a choice of custodians for your assets) and what happens if the wealth manager or bank has financial difficulties.
Deposits can be guaranteed by the Financial Services Compensation Scheme, up to a limit of £85,000 per person, per institution. This also only applies to FCA-regulated firms, however, but you can rest assured that all the wealth managers on findaWEALTHMANAGER.com’s panel are regulated by the FCA.
2. How experienced and qualified are the individuals I will be dealing with?
The Retail Distribution Review reforms which came into force at the start of 2013 require that all financial advisers are now qualified at QCF Level 4, the equivalent of undergraduate level.
Many firms have now moved to get their staff qualified at Level 6, however, and if this is important to you then simply enquire. Additionally, if you are looking for specific capabilities, such as in financial planning, you should ask about qualification standards here too.
3. How long has your firm been established, and who owns the business?
There are wealth managers in the UK with histories dating back centuries, but also some newer players who have quickly built good reputations too. Brand recognition and prestige might have some influence in your eventual choice of wealth manager, yet image isn’t everything.
Corporate structure may be more important than you realise due to its effect on business strategy. Whether a wealth manager is listed or privately-held, and who its ultimate owner is, should be made clear.
4. What is the investment profile of your other clients?
It is interesting to know whether your profile matches that of the existing clients of the wealth manager and the individual relationship/investment manager who would be working for you.
You may require a wealth manager with special expertise if, for example, you are an entrepreneur or professional sportsperson and so have more complex investment management and financial planning needs.
5. How many clients does a relationship or investment manager usually have?
The client-adviser ratio at a wealth manager is a crucial consideration as this will necessarily dictate the amount of time an adviser can spend on each client.
Client-adviser ratios vary significantly according to the level of wealth each adviser’s clients represent (and so the likely complexity of their affairs). Those working in the mass affluent market may have a hundred or more clients on their books, while those servicing ultra high net worth individuals may have fewer than twenty.
6. Do you really understand my investment profile?
Make sure that the wealth manager understands precisely what your financial circumstances are and what your short- and long-term objectives are. Good wealth managers are adept at drawing out a full picture and assessing clients’ true attitudes towards factors like investment risk and volatility.
It is a regulatory requirement that wealth managers only recommend investments that are aligned with your profile and needs. Indeed, they will have to regularly reassess your investment strategy and should be keen to tell you about their process for this up front.
7. What has your investment performance been historically?
Performance is not everything, but make sure you understand how a wealth manager’s investments have performed for clients with a similar profile to yours. Ask the firm to compare its performance against a common benchmark such as the FTSE 100 stock market over the last one, three and five years.
The key metric you are looking for is “outperformance”, meaning the degree to which the wealth manager delivered gains in excess of general market rises.
8. Which other services do you provide apart from investment management?
Wealth managers vary hugely in terms of their capabilities. Some offer every imaginable financial service, being part of a global banking group with divisions geared up for the very wealthiest clients; others prefer to focus solely on running investment portfolio.
Depending on the complexity of your affairs, you may require a host of services which could also include those of a trust company or law firm for certain structures. Consider asking a potential wealth manager about the quality of their professional networks if you are considering options like trusts.
9. Which charges do I pay for your services?
The RDR also requires that wealth managers make their charging structures completely transparent to clients. You are likely to be given a top-line overall fee, within which there are likely to be a number of components. Annual ad valorem management fees will see you charged around 1.5% of the total assets you invest and then possibly a performance fee on top of that.
A wealth manager is obliged to make their total fees completely transparent to you, including any performance fees which may kick in. You are most likely to find that wealth planning services entail a separate fee.
10. What happens if I am unhappy about something in the future?
You should ask about the procedure for clients who are unhappy with an element of their wealth management provision. A potential provider should be able to deal with this question quite easily and you should not be embarrassed to ask it.
All good wealth managers are dedicated to the highest levels of service and most today are very active in asking clients for regular feedback. You should flag up any sources of dissatisfaction straight away, however.
These questions provide a useful framework for assessing potential wealth managers and will help you cover all the main points clients need to consider. If you are meeting with multiple prospective wealth managers it may be helpful to take notes so that you can consider their various merits on a like-for-like basis once you have seen them all.
For more insights on specific wealth managers, you can contact our team HERE.