If you’re considering working with a wealth manager, congratulations! You’ve taken the first crucial step towards a secure, considered financial future. However, we know that it can be daunting to face the litany of information and firms on offer to you and assess which is the right one for you.
It’s an important choice, to be sure, and well worth taking the time to properly weigh your options. You’re essentially choosing somebody to place a large amount of trust in, not to mention a large sum of money and the shape of your financial picture in the future.
Not all wealth management firms are the same – that’s not to say that they’re necessarily better or worse than each other, but your experience will likely be vastly different depending on who you choose.
Here are 7 things to look out for to help you make your decision.
1. What size firm are they?
In this scenario, size matters! Large wealth management firms with many branches will give you a very different client experience to smaller, boutique firms.
Larger firms
With a large household name, you’ll often have the benefit of a wide pool of support staff, competitive fees, and the security of them being well-established.
However, the drawback here is that you are likely to get a less personalised service, and the products they recommend could be off-the-shelf rather than closely tailored to your specific needs, as they often have relationships with providers that inform what’s available to use.
Think closer to the experience of belonging to a chain bank. This may or may not be important to you, but it is worth considering.
Boutique firms
On the other hand, smaller, independent boutique firms typically offer a highly personal service with a dedicated wealth manager and client services support team who know you by name and remember to ask how your holiday was.
They will spend significant time getting to know you, your needs, and your goals, before building a plan that is tailored bespoke to you. At Tideway, for example, we have access to the whole of the market – whilst we have our preferred providers for certain things, we aren’t beholden to them and can combine products to achieve your goals.
Additionally, their bijou size will often mean that smaller firms are agile and able to respond nimbly to changes in rules, legislation, and market conditions, which can mean getting to take advantage of some very limited windows of opportunity.
So, if a personal service and a tailored solution is important to you, you will certainly be better suited to a smaller firm rather than a larger, household name.
2. What is their minimum client account size?
There is still a misconception that financial advice and wealth management are only for the extremely wealthy. Whilst it’s true that you do need some assets for wealth management to be relevant, and some wealth managers do set minimum client account sizes, these might not be as high as you’d think.
Different firms have service offerings appropriate to different types of clients. It’s important to find an adviser whose service is appropriate to your level of wealth and desire for personal planning.
On one end of the scale, you have those who will offer services for people fairly early in their wealth management journey, with a moderate amount of savings or assets (these are often the household name firms). At the other, there are those offering highly specific services for ultra-high net worth individuals, often generational wealth, with complex financial needs.
The middle ground seems to have the widest choice – successful professionals who have built up their wealth, business owners, entrepreneurs, and so on, who are looking for guidance to maximise their wealth’s potential.
For example, at Tideway our minimum client account size is £250,000 of manageable assets or capital to invest. This can be across a combination of pensions, ISAs, and other investments, and if you’re a couple it can be a combined sum from the two of you.
That may sound like a lot in isolation, but if you’ve been diligently building up a pension for most of your working life, it’s quite likely you’re there without realising it – that’s only about a £700 contribution per month over 30 years of working life, not allowing for value added through interest or investment growth! This could also come from another source as a lump sum, such as sale of a property or business, or receiving an inheritance.
3. What services do they offer?
There are many different services that come under the umbrella of ‘wealth management’. Some companies will offer a wide range, whereas others will specialise in just one or two areas. A few use ‘wealth management’ to simply mean pension planning without broader inheritance or estate planning considerations, which may not fully address how your wealth is structured or passed on.
If you know precisely what help you need, look for a firm who leads with that. If your needs are more general or if you’re not quite sure where to start, look for a firm with a wide range of expertise and let them guide you.
Most commonly, clients who come to Tideway are looking for one or several of the following:
- Support with planning ahead for their retirement – how much will they need to maintain their lifestyle, and how will they ensure that their funds last?
- Guidance on drawing an income (often from multiple streams) with as little tax due as possible
- Advice on investing or gifting a windfall lump sum of money (such as an inheritance, proceeds from a business or property sale, or a divorce settlement)
- Help with estate planning and passing on their wealth, mitigating Inheritance Tax (IHT) liability as far as possible
Whatever your needs, you should be able to find a wealth manager that suits them. The key is in simply asking what they specialise in and if they have any specific qualifications that back that up.
Tideway specialises in helping clients save tax efficiently towards retirement, but our expertise is a lot more far-ranging than that. For us, wealth management encompasses a holistic approach to planning and managing your financial position.
For more information, visit our Services pages.
4. How do they approach investing?
Investment approaches differ between wealth managers. Some offer in-house management, whereas others simply outsource the investment management to a third party, who themselves will have their own fees. Some firms will take a passive approach, whereas others will play an active role in managing your investments.
There is no right or wrong way for how firms manage investments, but it is important to ask questions so that you can understand what you will get for your money and the amount of risk involved. Ultimately, whilst you may not care to know the precise ins and outs of the investment decisions taken on your portfolio, it’s important for you to be aligned with your wealth manager on a fundamental level, and to trust and be comfortable with the approach that they recommend for you.
At Tideway, we take an active, in-house approach. Our ‘model portfolios’ are designed to deliver a range of levels of risk and return, and are composed of funds that we have researched rigorously and whose managers we have full confidence in.
To read more about how we invest, visit our page on Our Investment Philosophy.
5. What are their fees?
The total fees involved will vary between different wealth managers. There are usually three key charges:
- Wealth Management – This may include an initial advice fee (as there is often some initial work in getting your advice and accounts set up properly) as well as ongoing advice and portfolio management charges.
- Custody – The annual custody or platform provider’s charge.
- Investment – If your wealth manager uses external fund investment managers to manage your funds, these funds will have charges which are ultimately paid by the client.
There can be other charges, such as outsourced portfolio management, dealing commissions and exit penalties. These fees can be fixed, hourly or as a percentage of the assets involved. It is not uncommon to see annual charges go as high as 2.5–2.7% p.a.
At Tideway, we wrap our advice fees and custody fees into a simple charge of 1% per annum of funds managed. Any investment fees levied by fund managers employed by the funds we invest into are deducted prior to those funds returns and range from 0.2% per annum to 1% per annum.
Uniquely, we do not charge a fee for our initial advice or any type of exit penalties. To read more about our fee structure, visit our Fees page.
Whilst it’s not always easy due to the different pricing methods of different wealth managers, the level of fees can impact performance significantly, and it’s a good idea to compare fees for custody, advice, and investment across all the wealth managers you may be considering, and for the size of fund you are considering allocating them.
6. How do they protect your money?
When you’re handing over the reins of your hard-earned capital, it’s important to be certain that it will be protected in all events.
It’s important to ask and understand who actually holds your funds and investments. This is called ‘custody’.
Your wealth manager will rarely take direct custody of your investments nor hold client money themselves. They will likely work with one or more custodian firms with strong fiduciary backgrounds who will hold your investments and create wrapper accounts such as pensions and ISAs.
This means that even if the worst should happen and the firm you choose to work with encounters problems, your money is protected. Ensure that you ask what the ‘SIPP provider’ or ‘ISA provider’ will be and what custodian they use, and do your research on that company, as well as the wealth manager.
You should also ask about the firm’s compliance processes and consult the Financial Conduct Authority (FCA) register to ensure that their authorisation matches what they state on their website and marketing materials.
Most good firms should have an in-house compliance function, whose main role is to ensure that the internal processes of the firm are robust, and staff are well trained.
Some firms may operate as an “appointed representative” of another firm, which essentially means they are using the other firm as an umbrella organisation in respect of advice liability, compliance and back office systems. Whilst this may not necessarily be bad news, it may indicate a potential reduction in oversight and control.
7. How often can I expect to receive updates?
The frequency with which you’ll hear from your wealth manager and your overall client experience will vary greatly from firm to firm. Some of this can be attributed to size of firm as discussed, but it’s more likely to do with the company’s culture, priorities, and values. Again, there’s no right or wrong approach here, but it will be important to make sure that your preferences for how often you want communication matches up with what the company provides.
Some firms might simply get in touch once a year to see if you want a catch up or review meeting, but otherwise leave you to it. Others might mandate that annual meeting but leave other contact up to you. Some might send regular newsletters and periodic updates, or provide a digital platform for you to be able to access your performance figures.
Tideway’s approach is a blend. We’re focused on building a relationship with our clients based on trust, transparency, and a shared vision for your financial future. We provide a Client Portal which allows our clients to access their portfolio information – performance, breakdown, returns, and so on – at their leisure.
In addition, we also:
- Hold annual reviews to make sure your plan is still suitable and adjust as necessary
- Send out fortnightly market updates written by senior members of our team, in addition to a digest email every two months with our latest articles (you can opt out of these if you prefer)
- Hold regular webinars to inform clients of major changes and to allow them the chance to ask questions
- Host in-person client social events
- Regularly and proactively contact our clients on a personal basis when changes in markets or legislation could affect them
Our wealth managers are available as and when you need them – there are no extra fees for time spent answering your queries or revising your plan when unexpected life changes occur. After all, first and foremost we’re here to help you.
What next?
Selecting a wealth manager is not an easy task and does require some effort and focus. But when you find the right firm, a lot of worries can be lifted, so it’s worth persevering.
Ensure that you have an idea beforehand about what services are most important to you and what you’re trying to accomplish.
Tideway’s philosophy is that everyone is different, and advice needs to be tailored to the individual – each client must have their own personal wealth manager. But we eschew expensive offices and client entertainment, preferring to focus our energy on the advice and investment performance of our clients’ funds. Ultimately, we aim to provide a good, personalised service in a price competitive way.
If you would like to learn more about how Tideway Wealth can help you. Please feel free to get in touch with one of our advisers via the form below and test the questions out!
