How do HNWIs and affluent people actually choose their financial advisors, wealth managers, and/or financial planners?

Usually someone recommends them a wealth manager. However, I think it is much better to do your own research before making any decisions – and especially when it comes to your financial future. Check credentials of an advisor, his/her reputation, ask for a track record. Plus, make sure you are not paying too much for an average performance. Here is a very useful blog post I recently came across. It explains what factors to consider when choosing your investment advisor:

How to choose a wealth manager? Picking investments advisor is an important task. Get it right, and you can enjoy real peace of mind. Get it wrong, and you may be putting your hard-earned money at risk. Here are some tips on picking the right investments advisor.

How to choose a wealth manager, step 1. How much do they charge? 

Overpaying for investment management and portfolio analysis creates a real drag on returns. The average fee for retail investments advisor is around 1%, according to a Pricemetrix study, so aim for lower than that. And the headline fee isn’t the only cost to consider. If the investments advisor puts your money into expensive, actively-managed mutual funds, that adds another level of expense. Look for those who prefer low-cost investments. When asking yourself a question How to choose a wealth manager start by evaluating their pricing policy.

How to choose a wealth manager, step 2. Do they have your interests at heart?

Every investments advisor will answer ‘yes’ to that question, of course. But some wealth managers get commissions for recommending particular products, which can create a conflict of interest. You want investment management and portfolio analysis specialist who only earns money from the fees you pay, not from anyone else. How to choose a wealth manager that will be dedicated to achieving the best financial results for you? Ask him (her) for several alternative ways to attain the same investment returns – and you will see what mix of assets (funds) they propose. If the manager insists on a single particular type of investments (certain mix or fund) – it can be interpreted as a sign of partiality.


How to choose a wealth manager, step 3. What’s their track record?

You can judge a wealth manager’s track record by asking for references and speaking to current clients. Or ask for statistics about the overall performance of client portfolios. Check out the manager’s own CV too – how long has he or she been in capital management and investment, and with what success? Past results never guarantee future performance, but a strong track record can at least give you some comfort.

How to choose a wealth manager, step 4. Can you access your funds?

Even if you’re planning to invest for the long term, you may need quick access to your money in an emergency. Find out whether your wealth manager plans to tie up your money in long-term investments, or in more liquid funds that can easily be withdrawn. The question How to choose a wealth manager is never an easy one to answer. But considering the five points outlined in this article will make the task easier for you.

How to choose a wealth manager, step 5. What’s their approach?

Every client is different. Depending on your situation, you may want to play it safe or take on more risk to maximize returns. A good wealth manager should recognize that, and be able to tailor his or her approach to your specific needs. The competitive specialist will advise you on where best to invest, whether you are looking for stable family investment management or quick and comparatively handsome returns. Beware of “one size fits all” solutions.

Hopefully, after reading this article, you will have no problems answering the mind-boggling question How to choose a wealth manager.

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