With a net worth of $5 million or more, you are probably familiar with the basics of wealth management. You know that you need a diverse portfolio, estate planning assistance, and careful guidance as you make the financial decisions that could have a long-lasting effect on you and your family. However, you may still be searching for just the right advisor. Here’s what to look for.
Wealth management for clients with $5 million is very different from wealth management for those who are just starting to build their wealth. There is nothing wrong with a diverse client list, but it is important to select an advisor who has experience with clients who are similar to you. Ask about demographics, portfolio size, and other details that can help you understand whether the advisor is a good fit for you.
Products and Services
A good wealth manager offers a full line of products and services, from investment advice to estate planning. While some people choose to use different advisors to handle various aspects of their wealth, this can be a mistake. A single firm overseeing your entire financial plan has a better understanding of the big picture, and of how each decision may affect the whole.
You also need a wealth management advisor who is not afraid to think outside the box when it comes to diversifying your portfolio. Emerging markets, real estate, dividend paying equities, REITS, MLP’s, investment grade corporate bonds… there are innumerable ways to invest your money, and your advisor should be confident enough to step into these various territories, yet disciplined enough to follow a strategy rather than risking your money on the latest fad.
There are three basic fee structures for wealth management advisors. A commissioned broker typically works for a large firm. Both the broker and the firm take a percentage of every transaction. A fee-based advisor charges both management fees and commissions. Fee structures for fee-based advisors can be complicated, so be sure you understand exactly what the charges are. A fee-only advisor charges either a percentage of managed assets or a flat fee, and does not make a commission from trading.
Note that fee-only advisors are the only wealth management advisors with a fiduciary duty to act in their clients’ best interests. Commissioned brokers are required to recommend suitable investments, and many brokers work hard to protect their clients’ interests. Still, you might prefer the peace of mind that comes from knowing that there is no financial incentive for a fee-only advisor to make any particular trades.
With a $5 million portfolio, just keeping it balanced can take up a great deal of time. In addition, you should always feel welcome to check in with questions or concerns. It would certainly be unrealistic to expect your wealth manager not to have multiple clients, but try to get a feel for whether the advisor has the time and energy for you. A wealth manager who is spread too thin may not be able to make the best decisions for his or her clients. Also find out how often the wealth manager typically schedules client meetings, and how long it takes to get a response to e-mails, texts, or phone calls.
It can be tough to nail down a wealth management firm’s track record, as many simply operate quietly but faithfully, staying out of the limelight. It is not necessary to choose one that is out winning awards or making a big splash. Still, if everything else is equal between two firms, it is worth trying to find reviews and to determine if either firm has won any awards. This social proof can help reassure you that the wealth manager is doing something right.
Ultimately, the right wealth management advisor is the one that is right for you. Take the time to assess multiple firms to learn their company philosophy, values, and other intangibles, as well as their track record, fee structure, and typical client demographics. With your family’s wealth on the line, it is worth the trouble to find the right fit.
CORDA Investment Management, LLC, is an investment advisory firm that provides wealth management services for clients nationwide. CORDA’s headquarters is in Houston, and the firm also has offices in Austin and Dallas. If you are ready to begin a long-term professional relationship with a proven investment firm, please contact CORDA today at https://cordamanagement.com or by phone at (855) 439-0665.