Questions to Ask When Choosing a Wealth Management Company

When it comes to finding a wealth management company to handle your money, options abound. Some firms may flout their market-beating managers, others will highlight their rock-bottom fees. You may meet a wealth management advisor who has a trustworthy demeanor, but how do you know that you’re making the right decision?

Ultimately, you want to make sure that you trust the wealth management company you choose. You need sound, honest economic advice and planning that will carry you to retirement, through retirement and ultimately pass your wealth to the next generation. And this sort of long-term, measured financial stewardship isn’t a commodity, and neither are you.

So, how do you find the right fit? Here are a few questions to ask when choosing a wealth management company.

Will you outperform the market consistently?

Pay close attention to the answer here, as it will reveal a lot about a wealth management company. A good wealth manager should have an investment process and  a solid track record of growth over time. But red flags should fly if you’re told, without much explanation, how they beat the market yearly and have done so for years. While some companies may tout past performance, no investor or fund manager has the “magic touch”.

Historically, even the top money managers have a hard time beating their given benchmarks year after year. While no one will complain about outpacing the S&P 500 for a few years, a few percentage points of outperformance aren’t all that important in the grand scheme of things.

Instead, look for a wealth manager who answers this question in a more nuanced way. They should explain how investments are indeed important for capturing long-term growth, but growth is but one aspect of your plan. You want them to ask about you and your family’s goals, centering that discussion around balancing risk and growth. A wealth manager you can trust will talk about tax efficiency, strategies to protect your wealth and ways to transfer your wealth to the next generation when that time comes. They should offer a wholistic, long-term view — not quarter-to-quarter chest thumping. They should have a philosophy, and they should clearly articulate with evidence how they adhere to it.

What is the breadth of your services?

As implied in the answer above, managing wealth goes far beyond investments. Over time and as your wealth grows, you’ll probably need a hand with more technical planning considerations. While your wealth management advisor will offer sound advice and a bespoke plan, you may need help from a tax attorney to manage your end-of-year obligations, or an estate attorney to set up a wealth transfer strategy or trust. Someday your plan may need input from a business consultant, a real estate expert or even a lawyer. Does the firm offer these services, or at least have strong relationships with specialists who can help you?

You want to choose a wealth management firm that not only suits your needs today but can grow with you. Look for a company that makes that easy.

Are we a good fit for you, and how will we work together? 

This is a question that may cover a lot of territory. First, it can be helpful to know if your income and level of assets are like the manager’s other clients. Are you a small fish in a sea of bigger fishes? If that’s the case, it could make you feel uneasy about the level of commitment you’ll receive.

You also want to know how you’ll work together. Who answers the phone when you call? Will you meet quarterly, annually? Will your wealth manager check in from time to time? A satisfactory answer to this question will entirely depend on the level of engagement you feel comfortable with.

When it comes time to executing more technical work, like establishing an estate plan, you should know how they coordinate with your CPA, attorney and other fiduciaries to get the job done.

Generational considerations are another point to touch on. What happens if a wealth manager leaves the team or retires? When you pass away, is there a continuity plan to help your family manage their finances?

How much will it cost?

Finally, you want to know the fees and other costs. Is it a level fee or based on performance? If you need life insurance or other financial products, it’s important to know if the firm sells its own products or is open to offering a wide range of products. It’s also important to know how the wealth management firm incentivizes employees. For example, is it based on performance, commissions, up-front on same-year sales? Are they paid to sell more, or are there also incentives to service and retain clients?

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