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How to choose a wealth manager

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Employing a wealth manager to assist you in your financial affairs could maximise your monetary potential, and ensure your future is prosperous.

“Many people think their wealth isn’t sizeable enough to warrant the services of a wealth manager. However, anyone who has an investment portfolio of some kind should investigate acquiring one,” says Lee Goggin, cofounder of Find A Wealth Manager.

“You don’t need millions at your disposal to qualify for a wealth manager – there are many that will work with clients who have £100,000 to invest, perhaps even less.”

However, choosing a wealth manager can be tricky. The very phrase ‘wealth manager’ is a nebulous one, covering a vast number of professionals who provide a diverse array of services. A wealth manager could simply administer and optimise your investment portfolio; others offer a wide range of services that include responsibility for almost every area of a client’s financial affairs.

As with any other product or service, it’s important to research and compare wealth management services before deciding who to entrust with your money. It is imperative a wealth manager intimately understands and respects your objectives and interests, and you enjoy a strong working relationship with them; face-to-face meeting is almost certainly vital. The following are important points to bear in mind during your search, and should assist you in choosing the right wealth manager.

  • Is my money safe?

Given that your wealth manager will be overseeing significant amounts of your money, the question of whether your money will be safe in their hands is naturally paramount.

“It is highly advisable that you only utilise the services of a wealth manager, or wealth management firm, regulated by the Financial Conduct Authority (FCA). The official stamp of approval of course denotes a legitimate organisation or individual, compliant with stringent regulations governing their activities,” says Goggin.

However, FCA authorised wealth managers are also covered by the Financial Services Compensation Scheme (FSCS); the FSCS protects deposits of up to £85,000 (up to £50,000 for investments), and will compensate you for any losses should your wealth manager’s  firm become unable, or likely to be unable, to pay claims against it.

  • What will it cost?

The Retail Distribution Review (RDR) reforms came into effect two years ago, and mean that wealth managers are legally obliged to make their fee structures completely transparent to clients.

This means that beyond a top-line overall figure, you should also be provided with a segmented breakdown of other charges, including management and performance fees, and how these fees are calculated.

  • Qualifications

The RDR reforms also demand that all certified financial advisers are now qualified at Qualifications and Credit Framework Level 4 (equivalent of undergraduate level).

“You should ask about their level of qualification, and ask for their certificate if necessary. Also, if you are looking for specific capabilities, such as in financial planning, you should ask about qualification standards here too,” says Goggin.

  • Your investment profile

Make sure that the wealth manager understands precisely what your financial circumstances are, as well as your financial objectives (both short- and long-term).

“The best wealth managers will compose a holistic picture of your situation, and assess your attitudes towards investment risk, volatility and the like,” says Goggin.

“It is a regulatory requirement that wealth managers only recommend investments that are aligned with your profile and needs. In fact, they are obliged to regularly reassess your investment strategy and should be keen to tell you about their process for this upfront.”

  • Other clients

The number of clients a wealth manager has determines how much of a wealth manager’s time and resources are dedicated to serving your needs.

“A mainstream wealth manager who mainly supervises investment portfolios could have as many as 100 clients – those servicing ultra high-net-worth individuals may have fewer than twenty,” says Goggin.

Don’t be afraid to ask about the profiles of their other clients, and gain a clear understanding of how much time will be devoted to you.

  • Prior investment performance

Ensure you have a clear picture of how a wealth manager’s investments have performed for other clients in the past.

“Ask a wealth manager to compare their performance against a decent benchmark – the FTSE 100 stock market over the past five years, for instance,” says Goggin.

“Look for a wealth manager that has consistently outperformed this benchmark.”


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