The wealth sector’s push into Scotland has been a big theme in recent years and a great many of the firms on our panel have one or several offices north of the border.
Investors choosing between two very evenly matched potential wealth managers should know that there can be very good reasons for splitting a portfolio between two providers. Here, we explain why using two wealth managers can work well.
Our two-way matching process means our users are introduced to a shortlist of wealth managers that are all a good fit in terms of investment thresholds, service offering and location. Investors can then meet with these firms’ advisers to see which one feels right. The accuracy of our process does sometimes mean that our matches are almost too good, however, leaving investors struggling to choose between two equally appealing institutions. So, what should would-be clients do when faced with this dilemma?
You may find that further meetings or digging deeper into things like performance track record or fees helps you choose between two wealth managers which were on level pegging after your first meetings. However, it is sometimes the case that investors really are equally impressed by two potential wealth providers.
In this scenario it is vital not to let a good situation (liking two potential providers) turn into a bad one (losing momentum altogether). The magical effect of compound growth means that the earlier you get starting investing the better and it would be a very great shame to fall at the last hurdle because firms A and B have both done such a good job of setting out their stores.
The magical effect of compound growth means that the earlier you get starting investing the better and it would be a very great shame to fall at the last hurdle because firms A and B have both done such a good job of setting out their stores
You certainly can split your investments between two wealth managers and there are several good reasons you might look to do so.
Wealth managers will provide ample performance data to help you compare their investment track record against the wider industry (our Guide to performance benchmarks provides invaluable guidance here). However, performance data is by definition backwards-looking and moreover might not represent a true picture of what a wealth manager could do for you. A willingness to be different – and so possibly underperform at times – is what allows some firms to outperform in the long term.
Also, we would always advise giving a wealth manager at least two to three years to prove itself on the performance front. For these reasons, investors sometimes choose to have two firms running similar portfolio mandates to see which merits eventually managing all the assets.
In contrast, some investors employ two wealth managers in order to access different investment styles and types of asset. It may be that one firm offers well-proven and tightly cost-controlled model portfolios which might be suitable for the bulk of your assets, but you may also wish to invest a smaller proportion in riskier investments like alternatives (this is called a core-satellite investment approach). Equally, you may wish to back private companies or experiment with impact investing and need specialist expertise for that.
Investments may be traditional or alternative, managed actively or passively, through funds or direct, with the cost and risk-return payoffs from these choices all interlinked. It may be that you genuinely need two wealth managers to create exactly the right portfolio for your needs
Investments may be traditional or alternative, managed actively or passively, through funds or direct, with the cost and risk-return payoffs from these choices all interlinked. It may be that you genuinely need two wealth managers to create exactly the right overall portfolio for your needs.
The term “wealth manager” is very broad, covering private banks, family offices, pure asset managers and one-stop shops which do both financial planning and investment management. Service offerings can also vary widely firm to firm.
You may therefore choose park longer-term holdings at a private bank able to offer mortgages and cards while also having second specialist that focuses only on investments and targets higher returns.
Equally, if you have an international element to your financial affairs you may need a provider of offshore services and advice alongside one that is only UK focused. The special tax reporting needs of US citizens is a case in point here.
Assets may be spread around institutions for a number of reasons and wealth managers are well used to being one of several providers. Many investment managers will relish the chance to go head to head with their peers on performance, and there’s a lot to be said for keeping everyone on their toes.
So, although a wealth manager will of course want to end up being your sole provider, in the meantime they will work in tandem with another very well. Risk-profiling requires an understanding of your entire financial position, but the best firms will aim for holistic advice that takes full account of “away assets”.
Note that you should not be doubling up on wealth planning advice, however, so it may be that the firm providing that element of your service should take the lead on asset allocation and your most significant investments.
There are several potential benefits to splitting your assets between two wealth managers, not least getting started rather than staying stalled by a tricky decision. But do make sure this choice is well justified as there are some cons alongside the pros.
While signing up with a wealth manager is far quicker and easier than some might fear, the fact remains that paperwork and checks are required. There will also be double the correspondence and contact to contend with.
You could find that splitting assets takes you below the minimum investment threshold of your chosen firm(s) or limits the service offered to you. There are cost implications to consider too as management fees tend to be discounted quite heavily for larger pots.
Some people want the comfort of spreading their assets around, some have specialised needs and others like the competitive element of a trial period. Therefore, many of the thousands of investors we have matched with wealth managers have indeed chosen to go with two providers, at least at first.
Our expert team is standing ready to explain how this kind of scenario tends to play out and to help anyone deliberating their wealth manager choices in any way. Whatever your needs and preferences, we can build a solution around you, so please get in contact to discuss your needs if you are not yet ready to start your search.