23 Questions You should Ask Before Hiring a Private Wealth Manager

June 12, 2017

Whether you are new to investing or have been socking away funds for years, the decision to get outside help may seem like a daunting process. Luckily, we put together this common-sense, step-by-step guide to researching your options. There are many titles when it comes to financial professionals – financial advisor, financial manager, private wealth manager, private asset manager… Regardless of the title, these 23 questions are a good start to hiring a private wealth manager.

Before we start, it’s important to first consider your stage of life and the size of your current portfolio. Consider this hypothetical scenario. John has $75,000 in a 401k when he is 35 and $400,000 in a 401k when he is 50. When John is recently retired at age 70, with a portfolio of $1M and he needs to make the most of the money he saved for retirement while maintaining a certain lifestyle. As you can imagine, each of these phases of life lends itself to different investment objectives and different needs. Here are 3 steps to go through to help you make this decision for your financial future.

Step one is to consider portfolio size and personal needs. Keep in mind that your options may vary based on portfolio size.

Investment optionsThis report explores various investing options and some of their pros and cons. As your portfolio grows, options become available that may not have been when you first started investing. An investment plan and firm that worked for you when you were 30 may not be a good fit for you when you’re 50.

Download Investment Options Report

  • Do you want to invest yourself via a discount broker?
  • Do you want a local financial planner who can help you set goals for different stages of life such as saving for a house, starting a college fund, or maintaining income during retirement?
  • Do you want an asset manager who may have proprietary strategies that focus on various investment goals?

Step two is to decide your investment objectives.

  • Are you investing for the long-term and able to stomach volatility along the way?
  • Are you saving to reach a shorter term goal?
  • Are you focused on income from the portfolio as a means to cover retirement expenses?
  • Are you nearing retirement and focused on capital preservation?
  • Do you have an existing portfolio strategy elsewhere that you need to complement?
  • Do you have a preference on portfolio composition? Maybe you like stocks, maybe you like ETFs, or maybe you aren’t sure.
  • Do you have enough background information? A Form ADV or Form U-4 can be found at https://brokercheck.finra.org/.

Step three is to narrow down the professionals you are considering and start interviewing them. You might start with the following list of questions:

  • How are you compensated? Investors often prefer transparent fee structures where the firm’s goals are aligned with your investment goals.
  • How many people are on the investment team? This may or may not be important to you.
  • What are the credentials and years of experience of the people I will be working with? There is not a direct correlation between experience/education and investment results, but certainly these criteria are a part of the picture to consider.
  • Will I talk to decision makers at the firm? Some firms are structured so that you speak with the person who makes the trades for your account, and others have representatives you talk to who relay information to and from the decision maker.
  • What kinds of investment products are used? Are they proprietary or external? This speaks to the firm’s strategy and methodology. If the firm is using products from third parties, how much coordination is there to ensure that there isn’t overlap? (For example: will 6 different mutual funds in your portfolio all contain Apple stock?)
  • Do you get paid differently depending on what strategy I utilize? Sometimes advisors get paid more when their clients use proprietary strategies versus third-party strategies. Some programs also incent their advisors to recommend certain outside investment programs instead of others that do not contribute revenue to the firm. This should all be disclosed to you.
  • How should I expect to receive communication, and how often? This is a personal preference. Some people desire frequent communication while others do not want to be bothered, preferring that their provider to act in their best interest and report via periodic statements.
  • What is your performance record? Consider your investment objective. If you plan to invest for the long term, you may want to consider their performance since inception, noting that past performance is no guarantee of future results. Additionally, there is high variability in short-term success. Short-term investments are generally best invested in highly liquid savings vehicles, such as money markets or savings accounts.
  • How long has the business been around? This may or may not be important to you, but it is helpful to see how firms fare after a full market cycle. A market cycle is the time period between two highs or lows in the S&P 500[1] or another applicable index.
  • What is the investment minimum? This is an important time saver. Many firms have some sort of minimum that has been chosen for the level of service and type of investment provided.
  • What investment vehicles do you utilize in your portfolios? Stocks, bonds, ETFs, treasuries, etc. You want to make sure that the investment vehicles used align with your investment objectives and risk tolerance. Some vehicles are inherently more volatile. Some have very simple fee structures, while others are complex and require you to read the fine print.
  • Are there any transaction fees? There may be costs associated with each trade made. Sometimes you can pay a flat fee for unlimited trades.
  • Do I have to custody assets at a specific place? This can add peace of mind, knowing your assets are with a third party. Many registered investment advisors (RIAs) use nationally known brokerage firms to provide custodial services such as a trading platform, account statements and a website portal to access your account. The brokerage firms will provide SIPC coverage and will generally have excess coverage policies.

The terminology in the financial services industry can be confusing and overwhelming. Rather than focus on a title, try to focus on whether a particular organization meets your needs. In the end, titles are likely less important than how well they align with your financial needs. [Learn more about the difference between a financial manager and private wealth manager: https://www.afamcapital.com/blog/difference-financial-manager-private-wealth-manager/].


[1] http://www.nasdaq.com/investing/glossary/m/market-cycle

Investing involves risk, including risk of loss. Diversification does not ensure a profit or guarantee against loss. Past performance is no guarantee of future results.

The information provided herein is educational in nature, is not individualized, and is not intended to serve as the primary basis for your retirement, investment, or tax-planning decisions.

While AFAM has used reasonable efforts to obtain information from reliable sources, we make no representations or warranties as to the accuracy, reliability or completeness of third party information presented herein. The views and opinions expressed are subject to change at any time based upon market or other conditions and AFAM disclaims any responsibility to update such views.

Nothing presented herein is, or is intended to constitute, investment advice, nor sales material, and no investment decision should be made based on any information provided herein. Please consult your tax or financial advisor for additional information concerning your specific situation.


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We believe that you pre-pay for expectations in growth stocks, whereas value stocks have already been discounted. This is why over the long-term, growth stocks have trailed value stocks, returning an annualized average of 9.4% while value stocks have returned an annualized average of 13.6% over the same time period.

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