For investors who believe there is strength in numbers, a private wealth management team may be an approach in fulfilling financial goals.
In a first quarter wealth level study of households with a net worth between $100,000 and $1 million, the majority of respondents did not give themselves high marks for financial literacy. Fifty-three percent said they were “fairly knowledgeable, but still have a great deal to learn,” while one-third allowed that they were “not very knowledgeable about financial products and investments” but did understand “some things.”
For these and other reasons, an investor seeking out a professional investment advisor might opt for the strength-in-numbers approach of a private wealth management team. But just as with choosing a financial advisor, there are questions you should have at the ready to determine whether you are comfortable with a private wealth management team approach, or determine whether the whole will be more than the sum of its parts:
· Background and experience: ∙What education does each team member have? How long has each team member been in practice? What qualifications do they have? What professional certifications have they earned? In what areas (such as tax planning, retirement, investments) do they have proven track record? Are there any disciplinary actions on their records?
There are several online resources to check on a financial planner’s background, including the Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), CFP Board and Association for Investment Management (AIMR)
· Service: How often would the private wealth management team meet to discuss your portfolio? How often would they meet with you?
· Investment philosophy: What is it, and are all team members on the same page? Do different team members have conflicting approaches?
· Who would be your primary contact?
· Does the private wealth management team have a chief investment officer and/or a director of research? Do they have a relationship manager? Does the team include an attorney and tax advisor?
· Does the team construct a comprehensive financial plan, and how often will it be reviewed?
· Does the team work with clients with similar financial circumstances as yourself?
· Are the team members in-house or are some in satellite locations?
· What is the fee structure? How are private wealth management team members compensated?
Finally, affluent households we surveyed put the highest premium on honesty and trustworthiness as traits prized in a financial advisor. You should insist on meeting each individual on the private wealth management team to ensure that you are comfortable with them as individuals.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.