Top 10 Things to Look for When Choosing a Wealth Management Company

wealth management company.

Wealth management is serious business!

In order to secure your financial future, you need to make the right decisions. However, sometimes it is easier said than done. Wealth management is complex and if you are thinking about hiring a wealth management company then you are making a wise choice.

In 2016, through the use of wealth management, the number of millionaires in the United States went from 3.39 million to 5.15 million. Wealth management is one of the most effective tools for getting to millionaire status.

Even if you don’t become a millionaire, wealth management can put you on the road to being financially comfortable.

Here are ten things you should look out for when choosing a wealth management company.

1. Research and Shortlist

When you apply for a job, the employer shortlists the best applicants and then calls them in for an interview. Keep that scenario in mind when choosing a wealth management company.

Select companies and research them. Check their online reviews. If you have friends and family who use these types of services, ask for their recommendations.

Once you have a list of potential wealth management companies then you can go ahead and shortlist them. Next, you should go in and “interview” them to see if they are a good fit for you.

2. Decide On The Services You Really Need

To prevent yourself from falling for an upsell that you don’t really need, you should always make a list of what you want from a wealth management service. Remember most companies will offer several different financial services. Knowing exactly what you want will prevent you from being coerced into getting add-ons that you don’t need.

Be flexible, your portfolio doesn’t have to be with one company. Sometimes, a company may handle one area of investment you are interested in better than another. It is okay to use them for what they are good at and find other companies that are good at other types of investments you want to try.

3. Decide What You Want To Achieve

Goals are important when it comes to wealth management. Setting clear specific goals will help you to assess your risk tolerance for investments and how long you want your investments to last.

For example, your goal may be to have better estate management or it may be to ensure that you have finances available to take care of an adult child with special needs should you die.

Your goals will help you to decide what is an acceptable return on your investment. Never go into wealth management without clearly defining your goals and the time frame in which you wish to achieve them.

4. Find Out The Philosophy Of Your Wealth Management Company

In life, our philosophy shapes and defines how we see the world. It also affects how we operate in it. The same is true of any company.

Find out the philosophy of the company you want to use for investment. In this way, you will discover more about your potential financial advisors.

For example, your wealth management company may have a philosophy of finding and purchasing securities that are discounted but have the potential to be extremely valuable when held for certain periods. They may only go into partnerships with other companies who take the same approach they do to investments.

Whatever their philosophy it must be consistent since it is the driving force behind how they select investments for your portfolio.

5. Find Out How Important You Will Be

In any relationship, you want to feel valued. This is also true about your relationship with your wealth management company. It is easy to find out how much of a priority you will be by asking the right questions.

Here are some examples of questions you should ask:

  • How many clients do you currently work with?
  • How often can I expect to hear from you if I employ you?
  • What is the size of your support staff?
  • What is the staff to client relationship ratio?

In most cases, the more attention you get the better off you will be since this will ensure that your money is placed in the right investments.

6. How Involved Can You Be

When hiring a wealth management company you will want to find out how involved you can be. It should not be a case where you give them your money and they do with it as they will without consulting you.

However, if you feel comfortable enough with your wealth manager to give them full discretion when it comes to your investment portfolio then go ahead. In contrast, if you are one of those people who could never allow anyone to invest for you without your involvement then make it clear from the outset.

Even if you don’t understand some of the investments that they suggest, it is their job to be patient enough with you so that you can understand it. With that being said, you should decide ahead of time when and how your involvement will take place.

You don’t want to be overtaxed with decisions because that’s why you are hiring them in the first place. The bottom line is that you need to create a delicate balance.

7. Let’s Talk Compensation

Find out ahead of time how your wealth management company wishes to be compensated for handling your finances. There are several ways they can be compensated but it depends on the company. Some will charge you an advisory fee while others will take a percentage of the profits from your investments.

The best type of compensation is actually the latter even if it means you will have to share the profits. This is because being privy to a portion of your profits provides a greater incentive for the company to act in your best interests. When you make money they also make money.

8. Does Your Wealth Management Company Invest With You

Just like you the individuals in your wealth management company have financial goals. Find out if they invest in the same things they want you to invest in. This will give you a good idea of whether what they are doing is actually good for you.

You can be sure that due diligence has been applied if they are putting their money into the same stocks, bonds, real estate or other investments that they invest your money in.

9. Ask For Samples Of Their Work

Looking at portfolios that will be similar to yours is one way to assess what any wealth management company can do for you. However, you should bear in mind that no portfolio can completely mirror the one you will receive due to inevitable personal customization.

When looking at the performances of the investments outlined in the portfolios, you should revisit the company’s philosophy. This will help you to get a clearer picture of what is happening. If they believe in long-term investments then you should be looking at portfolios that show a complete cycle as opposed to those that are just half or quarter way through the cycle.

Consider too that the profits you see in the portfolios may have been limited or enhanced by the availability of investment opportunities at any given time. This can skew the results and make one portfolio look more impressive than the other.

The bottom line is, don’t hire an insurance company to cater to your finances without seeing firsthand what they can do.

10. Trust Your Gut Feeling

It’s your money and you have to protect it, after asking candid questions, carefully think about the responses that you get. Often you can tell if a company is shady based on how they respond to your questions and your requests for more information.

If they are open and willing to answer all of your questions and you are satisfied with their answers then go with your gut feeling. Remember too that just because a company is popular and has a large investment portfolio that doesn’t mean it’s right for you.

Focus on your individual needs and the performance that the company has shown with others who have similar needs as yours.

Final Thoughts

Finding the right wealth management company is not always easy. However, it can become simpler if you find out as much as you can about any company you wish to get involved with.

Get reviews and feedback from reliable sources so that you can make informed choices. Give preference to companies that take a small compensation from your profits, since this gives them an incentive to give you excellent service.

You should also make sure that you ask questions about how much attention they can give you and how much input you can give about the investment of your money. Remember too that it is important that they invest in the same investment vehicles that they introduce you to.

If you would like more tips to help you with your finances please visit our blog. You will find several useful tips that will help you make the right financial choices for your lifestyle.