Many executives and small business owners with high net worth depend on wealth managers to make the biggest return on their financial assets. But it is far too common for investors to rely on these experts’ advice without getting the full picture behind their financial advice. Be sure you understand what you should be getting from your wealth manager, and your role in getting the best recommendations for your financial future.
What is a Wealth Manager
Often, people may use the terms wealth manager and financial advisor interchangeably, but in fact, they serve slightly different functions. Financial advisors manage your retirement, stock, and investment accounts and can make recommendations about investment and portfolio strategies. They may be focused on the products offered by their company, or be paid via commissions on the investments they recommended. They should ask you about your short- and long-term financial goals (such as buying a home or planning for retirement). But they don’t generally examine the bigger picture or provide guidance about your financial and life goals.
That’s where a wealth manager comes in. A wealth manager offers big picture advice for how to achieve the lifestyle you want including future business investments. Wealth management services include a broader scope of strategic guidance. They can offer comprehensive and holistic advice, in addition to answering questions about financial details. That makes them especially well suited to serving the needs of business owners and executives.
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What You Should be Getting from Your Wealth Manager
Wealth managers specialize in addressing complex financial situations. If you are using the full range of services, here are some things you should be getting from your wealth manager:
- Fee-only services (rather than commissions)
- Proactive goal-setting for financial priorities
- Comprehensive financial planning
- Tax planning and strategic advice (though they do not generally file tax returns)
- Recommendations for estate planning and generational wealth transfers
- Charitable considerations
- Objective review of financial products and services
- Integrated advice with coordinated strategies
Like financial advisors, wealth managers are legal fiduciaries. That means they have a legal obligation to take professional care to review all your information and give you accurate information, and to put your interests first when providing advice. Because wealth managers take a broader perspective, this should include suggesting better investment strategies and products (even if it means changing investment companies). They should also be reviewing your goals and priorities and comparing your current financial practices to identify where those practices and priorities are mis-matched. The integrated advice that you should be getting from your wealth manager should account for:
- Business interests and shares
- Tax optimization
- Insurance products and coverage
- Legacy planning and estate gifts
- Business succession planning
- Charitable giving and philanthropy (including tax implications)
- Investment strategies
How to Get the Best Advice from Your Wealth Manager
If you want to receive the full benefit that you should be getting from your wealth manager, you need to come to the table with a clear understanding of your assets and your personal goals more generally. Failure to communicate is one reason why wealth advisors’ advice often falls short. After all, if you don’t know where you are going, even the best navigator won’t be able to get you there.
Just like when you engage in business strategic planning or succession planning, you need to take time to clarify your needs, timelines, and priorities. If you want your wealth manager to provide comprehensive advice, you need to do the work to define a comprehensive set of goals that include your personal ambitions and your company’s needs, both financially and for your active participation as an operational owner. This could include:
- Retirement plans including when you want to retire and what you will do after that date
- Dependents’ needs including support obligations, inheritance expectations, and any financial support you want to provide for their education or support
- Business investment priorities including plans to grow or expand your existing ownership interests
- Future spending needs for big-ticket items such as homes, college tuition for children, and vehicles
- Lifestyle considerations such as travel desires and personal preferences
Your wealth management advice should be personalized to match your life circumstances today and desires for the future. For example, family business owners can work with a wealth manager to plan the transfer of assets and business ownership interests to the next generation, without putting their own retirement at risk. In doing so, the wealth manager may need to meet with the recipients, as well as the current business owner, to create a plan for when and how the child generation will buy into the company’s equity. Then they should be able to recommend financial plans for everyone involved.
Wealth management is a powerful tool for business owners and executives with complex financial situations. If you have done the work to prepare for your meeting, you can get more from your wealth manager, and ensure that all your financial goals will be met.
David Stanislaw is an organizational development specialist with over 25 years’ experience in improving processes in the workplace. Through business consulting and facilitation, David helps businesses make good use of financial planners and other fiduciaries. Contact us to meet with David to move toward high organizational functioning today.
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