Private Wealth Management – 5 Tips For Choosing the Right Firm
Finding the right wealth manager is crucially important if you want to see your wealth grow safely. The fleecing of clients in “retail banking” is unfortunately common, but you can use these 5 tips to make an informed choice.
1) Do you really need a wealth manager? Often what people are really looking for is a way to trade shares and other financial instruments. In this case, a reputable online brokerage service could make more sense.
2) Find out who will actually be the one managing your wealth. The jovial middle-aged gentleman you had lunch with may be delegating the majority of his client-work to subordinates who may not have the experience to execute your transactions accurately. Look for concrete formal qualifications and training (e.g. CPA, CFA).
3) Think about the type of wealth management firm you want to invest with. The private banking arms of large well-known banks will often have better facilities, in-house trading teams and analysts for a large variety of sectors – all resources you can use to your advantage. The flipside is that advisors may always lead by suggesting the bank’s own investment funds to financially inexperienced clients, regardless of whether they are the best performers. If you are thinking of investing in a certain area, a smaller private bank with experience in that region may give you superior service.
4) Check the small print. While the entry fee may be less than you expected, keep an eye out for “hidden fees”, like percentage charges for entering a fund. Unscrupulous advisors may suggest changing funds 3-4 times a year, picking up a bonus at each turnover. This is how many of the large private banking services really milk their clients.
5) How financially secure is the bank? For some investors, the priority is not so much to grow their wealth, but to not LOSE money. Seek opinions from multiple sources on the bank in question. If your wealth is to be invested in the private bank’s own funds and financial instruments it pays to research its financial health. Similarly, check if the bank has pending compliance or regulatory issues.
If, like many, you just need a secure, private place to park your money with access to financial tools – “self-directed” Private banking can save you a great deal.
What does “self-directed” private banking mean? Its the same personal attention and quality of service you would get from a traditional private bank account, except you are in charge of investment choices. The wealth managers will execute your orders, but not advise to buy/sell, or otherwise touch your account without your express permission.