Personal Finance
7 Mistakes People Make When Hiring Wealth Managers
Selecting the wrong professional may put your wealth at risk.
Investors with $1 million or more in investable assets may often require specialized financial guidance to effectively manage and grow their wealth.
Working with a wealth manager, a professional offering comprehensive financial services tailored to affluent clients, may be instrumental in helping to plan and achieve financial goals.
In fact, SmartAsset’s latest proprietary model reveals that working with a wealth manager could potentially add from 36% to 212% more dollar value to investors’ portfolios over a lifetime, depending on multiple unique, individual factors.¹
But managing substantial wealth isn't always just about growing assets; it can also be important to plan for preserving and protecting assets for future generations.
The right wealth manager could help serve as both a strategist and safeguard, helping ensure your financial legacy remains intact despite potential market fluctuations, tax burdens, and economic uncertainties.
However, selecting the wrong professional may put your wealth at risk.
SmartAsset's no-cost tool can help you avoid some of the common mistakes in looking for a wealth manager. How does the free tool work? It's easy:
- Short questionnaire takes just a few minutes
- Match with vetted fiduciary wealth managers
- Compare your matches and choose the one you feel is best for you
The fiduciary wealth managers you match with can serve your area and are legally bound to work in your best interest. You may even be able to instantly connect with a wealth manager for a free introductory call. Wealth managers are vetted through our proprietary due diligence process.
We made our tool because finding a wealth manager can be tough. A good wealth manager can help provide peace of mind, and avoiding these seven blunders may save you years of stress. Scroll down for the list.
1. Hiring a Wealth Manager Who Is Not a Fiduciary
A fiduciary is legally obligated to act in your best interest, which helps eliminate potential conflicts of interest that could arise from commission-based recommendations.
Working with a fiduciary wealth manager may help add a layer of trust and alignment with your financial goals.
Without this fiduciary duty, a wealth manager may push financial products on you that might not align with your investment objectives or risk tolerance, and could end up costing you.
If you're currently heeding the advice of a non-fiduciary wealth manager, use our free tool to get matched with a fiduciary who operates with your future in mind.
2. Hiring the First Wealth Manager You Meet
While it might be convenient, selecting the first wealth manager you meet without thorough research could end up being detrimental.
Interviewing multiple professionals may help allow you to compare expertise, services, and compatibility with your financial objectives, which could help you find a better fit.
Even if you’re already working with a wealth manager, it may be worth getting a second opinion on your current financial plan. This free quiz matches you with fiduciary wealth managers in just a few minutes.
Find a Wealth Manager
3. Choosing a Wealth Manager with the Wrong Specialty
Wealth management is not one-size-fits-all, and everyone’s situation is unique.
Some wealth managers may excel in tax planning, while others might focus on legacy planning, business succession, or private market investments.
Selecting a professional whose expertise aligns with your specific financial concerns may be key to getting tailored advice that addresses your unique situation.
4. Picking a Wealth Manager with an Incompatible Strategy
Your wealth manager’s investment philosophy should closely match your own, whether it’s conservative preservation, aggressive growth, or income generation.
Misalignment may lead to undue risk exposure or overly cautious strategies that could limit potential returns.
5. Not Asking About Credentials
Not all wealth managers hold the same qualifications. It can be important to verify certifications that may indicate a higher level of expertise and commitment to ethical standards.
Ensuring your wealth manager has relevant credentials might also help provide confidence in their ability to effectively manage your assets.
6. Not Understanding How They Are Paid
Fee structures may have a profound impact on your long-term wealth. Some managers may charge a flat fee, while others might take a percentage of assets under management (AUM).
High-net-worth investors should probably also be wary of hidden commissions. Again, this is an area where it may be worth working with a fiduciary wealth manager, as any potential conflicts of interest must be disclosed.
7. Trying to Hire a Wealth Manager on Your Own
With so many financial professionals in the market, it may feel overwhelming to find the right fit.
Using a matching service can help match you with vetted wealth managers who specialize in high-net-worth strategies.
SmartAsset’s free matching quiz can match you with fiduciary wealth managers who serve your area. From there, you can compare and decide which advisor to work with. All wealth managers on the matching platform have been vetted through our proprietary due diligence process.
The quiz takes just a few minutes, and in many cases, you can be connected instantly with an advisor to have an introductory call.
This is a hypothetical example and is not representative of any specific security. Actual results when working with a financial advisor will vary.
This scenario is for illustrative purposes only and does not represent an actual client. Results may vary.
This is not an offer to buy or sell any security or interest. All investing involves risk, including loss of principal. Working with an adviser may come with potential downsides such as payment of fees (which will reduce returns). Past performance is not a guarantee of future results. There are no guarantees that working with an adviser will yield positive returns. The existence of a fiduciary duty does not prevent the rise of potential conflicts of interest.
SmartAsset.com is not intended to provide legal advice, tax advice, accounting advice or financial advice (Other than referring users to third party advisers registered or chartered as fiduciaries ("Adviser(s)") with a regulatory body in the United States). The article and opinions in this publication are for general information only and are not intended to provide specific advice or recommendations for any individual. We suggest that you consult your accountant, tax, or legal advisor with regard to your individual situation.
SmartAsset Advisors, LLC ("SmartAsset"), a wholly owned subsidiary of Financial Insight Technology, is registered with the U.S. Securities and Exchange Commission as an investment adviser. SmartAsset’s services are limited to referring users to third party advisers registered or chartered as fiduciaries ("Adviser(s)") with a regulatory body in the United States that have elected to participate in our matching platform based on information gathered from users through our online questionnaire. SmartAsset receives compensation from Advisers for our services. SmartAsset does not review the ongoing performance of any Adviser, participate in the management of any user’s account by an Adviser or provide advice regarding specific investments.
We do not manage client funds or hold custody of assets, we help users connect with relevant financial advisors.
Sources:
1. “The Value of a Financial Advisor: What’s It Really Worth?” SmartAsset (Nov. 2024)
