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By Hanna Woodside
o find your bank balance climbing up and up is thrilling but keeping and growing your wealth responsibly is crucial if you want to build your empire. There may come a point in your business journey when you consider enlisting the services of a wealth manager; financial advice can make all the difference in meeting your goals.
Here’s the lowdown on what a wealth manager does and how to work out if their services are right for you.
What does a wealth manager do?
Put simply, wealth management is a type of financial planning service. They create unique plans and financial strategies, so you can continue to grow and enjoy your money.
“Wealth managers can recommend products across mortgages, insurance, pensions, investments and advise tax planning,” explains financial planner and Relationship Manager Anna Stoughton at advice service Boring Money.
“They won’t normally recommend you other debt or general insurance products – such as credit cards or home insurance – but they can help you with cash-flow planning and budgeting.”
Sarah Roughsedge, founder of Eva Wealth Management for Women, says not to get too hung up on the term “wealth manager”.
“You might hear us referred to as wealth managers, financial advisers, or financial planners. All these terms are used interchangeably, so don’t be put off or won over by the job title itself,” she says.
“Wealth management can sound like you have to have loads of money and it’s only about how you invest it. But it can be more holistic: helping you to identify your financial goals and objectives, developing the strategies of how to get there and putting the right plans in place.
“That might involve investments but it’s so much more than that. And as a younger woman moving forward with their business, it’s the planning side which can be key at this stage in life.”
‘A wealth manager will help you identify your financial objectives and develop strategies to get you there – that might involve investments but it’s so much more than that.’
Will a wealth manager help with the direction of my business?
As a business owner, you will likely have an accountant or financial director in your team to advise you on your business finances. A wealth manager can liaise with them – for example, about the best way to separate personal and business assets or invest business assets effectively.
“If you’re taking income in the form of dividends, for example, then they need to know how this is set out and they can advise you on the tax implications. However, they will focus on your financial plans and not those of your company,” explains Stoughton.
Do I ‘qualify’ for a wealth manager?
Different advisers will have different minimum asset requirements (the amount of money a person has, whether that be in a bank account, Isa or trust). “Most wealth managers will set a minimum of at least £100,000 investable assets,” says Stoughton, although some advisers will have as much as a £1 million minimum.
“Minimum asset requirements vary and in London, they can be a lot more,” says Roughsedge. “You will have advisers who will give you one-off advice; others who expect you to work with them in an ongoing way. You’ll get a real range of different styles and approaches, depending on how that adviser runs their business.”
So if you're not eligible for a wealth manager just yet but might be in the next few years, it is still wise to start researching advisers who might work for you.
How do I find the right adviser?
Reputation and references are really important. Talk to other entrepreneurs for recommendations; other professionals such as your accountant or solicitor may have suggestions too. You can search websites such as findawealthmanager.com or Boring Money’s Find An Adviser service but always do your due diligence.
“It is critical to check they are fully FCA registered,” says Stoughton. “It’s also worth asking if they have other clients in the area and perhaps if any of them would be willing to speak to you.”
Ideally, you want to find an adviser with whom you can build a strong relationship over the long term.
“Your wealth manager will know about your family status, relationships, incomings and outgoings,” says Anna. “This can be quite an intimate process, so it is critical to find someone you can both confide in and who is empathetic to your own life goals, but who is also able to give you dispassionate advice.”
As different advisers have different approaches, it’s important to ask lots of questions so you can understand what they’re offering.
“I would be quizzing a potential adviser: ‘How do you work? What do you do?’. Push a little to find out the wider scope of their service,” says Roughsedge. “Equally, you want them to be asking you lots of exploratory, probing questions right at the initial stage before you’ve committed to anything. They should make you feel like they’re really listening to you and trying to understand what you want to achieve and whether they can help you.”
On the investment side, different advisers will have different approaches too.
“That’s important to dig into with a wealth manager. Some take an active approach and might try to outperform certain benchmarks. Others may favour tracking market returns, believing the additional cost of active management does not generate consistent outperformance,” explains Roughsedge.
“As long as the risk profile of your investments ties in with your objectives correctly, that’s the key thing.”
The adviser should be able to walk you through that and educate you on what those risks are, giving you clear examples of what an average risk looks like and what it means for your money: how much you could lose in a bad year, or how long it would take you to recover.
‘Your wealth manager will know about your family status, relationships, incomings and outgoings… This can be quite an intimate process.’
How much does a wealth manager cost?
“This varies and, unfortunately, transparency around charges still isn’t as good as it probably should be, making it hard to compare,” says Stoughton.
Normally there is an ongoing charge of around 1% to 1.5% of your investments per year, and often there is an initial charge, which can be as high as 5%.
“This is important to factor in – think carefully about this and ask what you’re really getting for that,” advises Stoughton.
Roughsedge agrees that there is a lot of variance in fees.
“There is a huge range of ways of charging and levels of fees. You might have an initial advice fee, which is typically a monetary amount. Or you might have someone who doesn’t charge an advice fee but charges an implementation fee, a percentage of what you invest via them. Some work on an hourly rate basis.
“If the adviser is offering an ongoing service, that could be linked to the amount they’re managing in investments for you or it could be a monthly retainer amount.”
Some wealth managers will offer a fixed fee or one-off price for a specific piece of advice, which can give you more transparency and control over how much you pay. The Boring Money Advice Service, for instance, includes a “fixed fee” filter, so you can search specifically for a financial adviser offering this charge structure.
When you are deciding who to work with, always ask for a clear breakdown of their costs and charges.
“They should be able to explain these clearly and simply. If they are in any way evasive, proceed with caution,” warns Stoughton. “They should describe precisely what service you’ll receive in the future if they’re asking you to pay an ongoing annual fee too.”
Some advisers have a broad fee structure, so they may suggest an initial discussion so they can confirm more specifically what their fee would be, says Roughsedge.
“They should be able to give you an overview, but don’t be put off if they ask for an initial chat to be able to give you an appropriate cost, rather than plucking a figure out of the air,” she says.
A wealth manager can help you with more than investing your money. Ask lots of questions and find a professional who understands your financial goals.
By Hanna Woodside
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