Questions to ask your Wealth Manager

Finding the right Wealth Manager is crucial to your success. The decisions they make with you will have a major impact on your current and future financial position. Therefore, it is extremely important to ask and evaluate your Wealth Manager with the following questions:

questions to ask your Apio wealth manager

What are your qualifications and are you legally licenced to provide financial advice?

Finding out what qualifications and licencing the wealth manager or advisor has behind their name can be a good indicator as to their level of expertise, ability and knowledge in the financial advisory field. It is important to note there are many different certifications out there, namely a CFP or CFA:

CFP – Certified Financial Planner

CFA – Chartered Financial Analyst

Always work with an advisor who is registered with the FSCA. Request a copy of their licence.

Who manages and makes the investment decisions on behalf of your portfolios?

Where do you find the time to advise your entire client base on their existing and future financial affairs while keeping an eye on the over 1200 local and 200,000 global unit trust funds there are out there? If an advisor or wealth manager does this function themselves, they will have very little time to focus on managing and advising their client base.

Look for an independent wealth manager who has partnered with a Discretionary Fund Manager (DFM). This allows the wealth manager to focus on ensuring that the structure of your overall portfolio is sound and can focus on doing what they do best: provide advice. Your wealth manager may then ensure that your risk profiling is always matched to how your portfolio should be managed and can hand this element over to trusted professionals who’s only job should be to

  1. manage the underlying portfolios and
  2. ensure that your portfolio is always kept in line with your personal investment mandate.

This is a job for a minimum of 10 – 15 investment professionals and should not be an individual advisors’ sole responsibility.

Far too often, investors and clients are pooled into model portfolios which have been suggested based on 4 or 5 boxes the investor has ticked. Clients are then left in these model portfolios for several years without much attention. This is an old school approach and can provide an explanation as to why many investors are not happy with the performance of their portfolios.

Do you offer independent advice, or are you contracted to a specific company?

Independent advisory firms are not required to provide solutions from only one company as is the case with advisors tied to specific firms. Independent advisors offer a wider range of options that may provide a better fit for a clients current and future needs. Often, tied advisers promote investments which have high upfront commissions and fees which erode investment returns over time and may not be able to offer the most cost-effective solutions which the independent practices are able to advise on. This also allows your investment portfolio to be placed on platforms where the partnered DFM may take over the management of your funds.

More importantly, look to partner with a wealth manager who looks to highlight shortfalls in your overall portfolio and work with you in closing these gaps in the most cost effective and tax efficient manner rather than one who looks to purely promote products.

How does your fee structure work, are your fees negotiable and are you paid more to recommend certain product over others?

It is important to completely understand the stance your wealth manager or advisor has on their fee structures. Once again, it is important to understand that if insurance-based investment platforms are being promoted as these often have high upfront charges which will pose penalties when one wants to cease the contributions or decide to withdraw or move their funds to a more cost-effective platform at a later stage.

To give an example, some insurance-based platforms charge annual fees in excess of 3.5% per annum. For this exorbitant fee, they provide very little transparency, limited management capabilities and high penalties which erode the overall performance over time. This additional 1.5% – 2% per annum fee compounded over a 15 – 20 year period can and will result in an unfavourable result for you as an investor. Review this regularly!