Posted on: May 1st, 2021
We find that the affluent want to work with the best professionals in all areas of their lives—especially when it comes to the areas of personal and business financial management.
Unfortunately, there are a plethora of different financial professionals seeking to do business with you. Identifying “the best” for you can feel like a herculean task. Even differentiating one financial professional from another can be challenging sometimes, as so many of them present themselves in similar ways.
One type of advisor who has the potential to be extremely beneficial to your financial life is an elite wealth manager. As you may be aware, lots of advisors these days call themselves wealth managers. But in our view, only a small percentage really provide comprehensive wealth management expertise that puts them at the elite level.
So how can you tell you’re looking at an elite wealth manager? The first step is to understand wealth management.
We find that most successful and affluent individuals and families are looking for wealth management to address their financial challenges—even if they don’t specifically use that terminology when talking about what they want.
True wealth management consists of two main components:
Investment management addresses preserving or growing your liquid wealth—assets that (in most cases) can be readily converted to cash. Of course, you may also have wealth that is illiquid—such as real estate (including your home), equity you have in your own business (if you are an entrepreneur) and certain hard assets such as artwork (if you are a collector).
This is the aspect of wealth management that most people immediately think of. Advisors, including elite wealth managers, generally will create and oversee a portfolio of investable assets. Services tied to this aspect of wealth management may include the following:
Almost all self-identified wealth managers provide investment management, in our experience. In many cases, that is all they provide. In those cases, the “wealth managers” aren’t wealth managers at all. Providing just investment management doesn’t go far enough. Wealth planning expertise is also required in order to be a wealth manager—and certainly an elite wealth manager.
Wealth planning requires possessing the technical expertise to deliver a diverse range of advanced strategies beyond investing, which sometimes means incorporating financial products. The tools and techniques of wealth planning range from basic to cutting-edge. The basics include legal strategies and financial products that are readily recognized and generally applicable for most affluent clients—such as trusts, partnerships and life insurance.
Under the broad umbrella of wealth planning is a range of specialties. Some of the most common among true wealth managers are the following:
While there are many distinct specialty areas, in practice there can be considerable overlap and synergistic possibilities between those areas. For example, by placing assets into an irrevocable trust for the primary purpose of transferring them to heirs (estate planning), asset protection possibilities may also arise.
Important: A high-quality wealth manager is unlikely to be expert in all the aspects of investment management and wealth planning. However, that professional should be able to readily access the requisite expertise on behalf of clients via a group of other experts. Therefore, it’s useful to think about wealth management as being provided by a cohesive team that is coordinated by the wealth manager.
A sizable number of wealth managers, along with their teams, are highly technically proficient when it comes to investment management and wealth planning.
But remember—you want to know how to spot an elite wealth manager. And even advisors who are absolutely brilliant in these areas are not automatically elite.
The key difference—the secret sauce, if you will—is that elite wealth managers are both technically excellent and able to develop a truly deep understanding of their clients that informs their actions. In effect, they build powerful professional (and sometimes personal) relationships with their clients that extend far beyond financial products and the number of zeros on their clients’ bottom line.
We find that much of the wealth management industry is investment- and product-centric. Advisor-client conversations are often heavily weighted toward how financial products and services are performing and what additional financial products and services might be needed.
In contrast, elite wealth managers are highly client-centric. Their focus is on understanding their clients as completely as possible. That means not just their investment preferences or their net worth goals, but also their hopes and dreams, their concerns and trepidations, and even their core values as people. Elite wealth managers take this approach because they are always looking for ways to add value to their clients’ lives as best they can. Sometimes this takes the form of investment management and wealth planning. But at other times, they find ways to make their clients’ lives better in ways not related to finance. Sometimes these ideas are ones they’re not even compensated for.
Example: Many elite wealth managers we know are introducing their clients to concierge medical practices. Among the affluent, there is a steady trend of seeking high-quality (even preferential) health care. Many concierge medical practices fit what these affluent families are looking for. Because elite wealth managers are highly attuned to their clients, when they determine that a service such as this one is warranted, they make the connection.
The upshot: The ability to develop powerful relationships with their clients is what makes extremely adept wealth managers elite wealth managers. Both are exceptionally technically proficient, but the elite wealth manager has a much better and more in-depth understanding of their clients—an understanding they use to boost the value they deliver to those clients. Because of these insights, the investment management and wealth planning solutions elite wealth managers deliver are often more in sync with their clients. Their clients, therefore, often end up with superior results.
There are a number of ways the wealthy find elite wealth managers to work with. The most prevalent approach is through referrals:
This report was prepared by, and is reprinted with permission from, VFO Inner Circle. AES Nation, LLC is the creator and publisher of VFO Inner Circle reports.
Disclosure: The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra IS or Kestra AS. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by Kestra IS or Kestra AS for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS.
Fusion Wealth Management is not affiliated with Kestra IS or Kestra AS. https://www.kestrafinancial.com/disclosures
VFO Inner Circle Special Report
By Russ Alan Prince and John J. Bowen Jr.
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