When you reach a certain level of wealth it’s wise to start seeking out the services of a professional wealth manager. You will inevitably be bombarded with advice from friends, family, colleagues and media outlets – often contradictory, always difficult to parse, this advice comes from every angle and it can be difficult to cut through all the noise.
An overarching mistake that people make when choosing a wealth management firm is that they are too short-sighted in their criteria; they look at the past performance of a firm and assume that it is an ironclad indicator of future success. That’s not always the case, however, and other key criteria need to be considered if you are to reap the full benefits of a wealth management company – here are a few of those criteria.
Credibility And Fiduciary Duty
Credentials through the CSI are something you can reliably depend upon, such as a Certified International Wealth Manager (CIWM) and Chartered Investment Manager (CIM), as well PFP (Personal Financial Planner) and CFP (Certified Financial Planner) certification. You might also consider working with an investment professional who holds the CFA (Chartered Financial Analyst) charter – a globally recognized designation considered to be the gold standard in investment management. To earn the CFA charter candidates must pass three exams covering a range of topics including portfolio management, quantitative methods, and financial reporting. Additionally, they need to have at least 4 years of applicable work experience.
Regardless of the credentials held by the investment professionals, picking a wealth management firm with a strong commitment to a code of ethics is a must. Choosing a wealth manager who has fiduciary duty – a legal obligation to act in your (the investor’s) best interest – provides an additional layer of protection for the investor.
You may have an impersonal relationship with your bank teller, but your wealth manager should have a detailed, clear picture of your assets and financial goals. not your wealth manager. You want a wealth management firm dedicated to communication, transparency and client satisfaction – not just a single-minded pursuit of growth. This is hopefully going to be a long-term working relationship and wealth manager you select will be able to provide better service if they have complete information about your financial and life situation.
Most wealth management firms have area of expertise they choose to focus on and not all firms offer every product available on the market – nor can they even advise on the use of said products – so it is worthwhile asking a wealth management company what products and investment vehicles they offer. Better yet, consult with a wealth management service that vets and assesses a number of wealth management firms; they will be well equipped to offer investor-empowering information on which firms offer a broad array of products.
These three criteria are some of the most fundamental when choosing a wealth management company. Do yourself a favour: when it comes time to consider a firm, try to cut through all the noise and anecdotal evidence, opting instead to look at these solid indicators of quality.