Wealth Management Expertise: 50 Shades of Green

July 12, 2016 · Written By Robert Jazwinski, CPA/PFS, CFP®

A quick Google search for “wealth management firms” yields no fewer than 2.5 million results—with half a dozen or so conveniently located in your hometown region.  So getting strategic about your finances—investing, insurance, retirement, income tax, and estate planning—should just be a simple matter of calling some numbers on the list, right?

Wrong.  Not only are wealth managers distinguished by the type of firms they represent (wirehouse versus independent) and the standards by which they practice (suitability versus fiduciary), different wealth advisors bring very different skills and approaches to the table—making them more or less successful at serving clients like you.

Let’s look at some examples:

Wealth Management for Affluent Clients vs. High-Net-Worth Clients

Below a certain threshold, affluent clients tend to need more basic and straightforward financial services.  But that doesn’t mean they should settle for wealth management on autopilot.  A good wealth advisor will deliver a highly-coordinated strategy—incorporating all your family’s needs and goals—and execute on a continuous basis.  Cash management, budgeting, insurance needs, estate planning, tax planning, and investing to meet your financial goals: all of this should occur in a wholly aligned structure, and receive diligent attention throughout the year.

Managing greater sums of net worth is more complicated.  High-net-worth (HNW) clients should be especially discriminating about the qualifications of any prospective wealth manager—including experience with private equity investments, alternative investments structured as hedge funds, complex insurance needs, income tax planning, etc.  HNW clients will likely also want to focus on asset protection.  Some wealth managers are incredibly well-versed in legacy planning, which includes protecting family wealth in a variety of long-term scenarios (bad marriages, dependency issues, and beyond).

Wealth Management for Professionals 

Certain careers and industries come with unique wealth management challenges.  Let’s use physicians as an example.  Depending on their state of practice, physicians may encounter asset protection issues, as they are subject to liability suits.  Wealth managers who specialize in serving physicians will introduce numerous ways to protect clients’ wealth from the claims of creditors.

In an age when so many medical practices are being acquired by large health systems, physicians may also need help managing their income streams.  They often need advice on how best to take advantage of benefit programs offered by new employers.  And because physicians are typically at the higher end of the wealth spectrum, they may need more nuanced advice about estate and charitable planning.  An effective wealth management firm will offer comprehensive service teams to address all these needs.

Wealth Managers vs. “Yes Men”

In 2008, we lived through one of worst periods of the financial markets.  Earlier this year we saw down markets reemerge temporarily.  Even though history tells us things will come back into balance (as they have), people are still very sensitive.  There’s a skeptical voice in their heads saying, “what if things are different this time?”

Some wealth advisors will do whatever a client wants.  A true wealth manager is able to help clients control the emotional impulses that cause even very smart people to make money mistakes.  For example, when people want to sell after big declines in the financial markets, it’s almost always too late.  They risk building a permanent loss of capital into their portfolios.

At JFS, we don’t consider ourselves “yes men.”  Clients come to us for our best judgement, based on history, theory, and the highest probability outcome.  And we give it to them.

Wealth Management Rooted in Trust

Effective wealth management hinges on trust and confidence.  Without these elements, client-advisor relationships quickly fall apart.  Recommendations won’t be accepted, important planning conversations won’t happen.  Surprisingly (or maybe not-so-surprisingly if you’ve already been down this path), not all wealth managers have the emotional intelligence to really hear clients’ objectives, or to build the kind of relationship that makes people feel valued.

According to a 2013 survey conducted by Financial Advisor magazine, “failure to communicate on a timely basis,” was the number one reason why clients fire their wealth advisors, followed by “failure to understand [goals]” and “failure to promptly return phone calls.”  Keep in mind, all three of these reasons outranked “poor investment performance.”
So how can you discern which wealth management firm is best suited to advise you and your family?

  • Start with referrals from your friends, family, and colleagues—especially those who share your personality or perspectives on financial planning.  If your coworker is like you (busy, procrastinating, micromanaging) and she’s happy with her wealth advisor, that’s a good lead.
  • Take the time to interview any prospective advisors with an in-person meeting.  Get a sense for how well they listen, and how receptive they are to your unique circumstances.
  • Ask about the firm’s wealth management teams and succession plans.  At JFS, every client is serviced by a three or four-person team.  When needed, the lead advisor can tap his or her peer for a specific functional area of expertise: tax, insurance, investment, and thereby deliver a better outcome.
  • Check to make sure there haven’t been any reported infractions against your prospective advisor or his/her wealth management firm.  Visit FINRA’s BrokerCheck page to look for any regulatory actions, violations, or complaints you might want to know about.

Start your wealth management search with a free consultation at one of our locations throughout Pennsylvania.  We’re always happy to schedule a sit-down, and help you decide if our team is a good fit for you.