You’re a middle-income earner with some assets and some serious goals for your future and retirement. You know you’re ready to begin organizing your finances to better meet these goals, but you aren’t entirely sure where to start. If you’ve never had help before with wealth management, it can all feel a little daunting. The good news is that you don’t actually need to know much about the ins and outs of wealth management to initiate the process of selecting a wealth manager. It doesn’t have to be an overnight decision, and you can begin your process slowly by casually browsing through advisors and financial firms online while you sip your morning coffee or evening cocktail.
There are hundreds of thousands of wealth and financial advisors available across the country. These days, some firms have online virtual advisors with instant chat services to make themselves even more accessible, or they offer trials so you can take your time deciding. With so many options available, you have even more reason to take a skillful approach in choosing whom you ultimately select to manage your finances.
Wealth management for beginners, most importantly, means knowing what qualifications to look for in a team of professionals. When you see a company or wealth manager that piques your interest, take down their contact information. Then, pick two or three and begin to compare their offerings. Checking their credentials will take a little more effort but will ultimately be well worth it—it’s your financial well-being on the line, after all.
Wealth management for beginners starts with a team effort
Wealth management is a comprehensive process. It involves a variety of insurance products, estate planning, and portfolio management. You want to be sure that the firm you choose can either service all these needs or maintains an established partnership with brokers who can. Once you’ve confirmed that the firms you are considering can fulfill these needs, it’s time to harness the power of the internet once again and do a bit more research on your short list of wealth managers.
To start out, an advisory firm must be registered with the federal and state government with a Form ADV. Form ADVs provide a written description of the financial services offered, owners, and employees. Every advisor must hand you a brochure that contains the information that can be found on their official Form ADV. You should also be able to search the database for the company you are interested in and review their credentials there. Most importantly, you can find out whether any disciplinary action has been taken against the firm. Less than 10% of registered investment advisors (RIAs) have ever received disciplinary action, and it may be best to move on if you see a negative mark.
Don’t forget about insurance
In focusing on other areas of wealth management, it can be easy to gloss over insurance, but you will need it, and in more than one product category. As you go through your financial plans with a wealth manager, expect them to talk about insurance strategies. Fortunately, when the topic of insurance does come up, you can delve into their broker relationship and ask these questions:
- Is this an “in house” agent?
- How frequently do you work with your agent-partner?
- Is it a full-service brokerage?
- Do they offer marketable insurance products?
It’s important to remember that estate planning needs to include insurance that not only covers your assets and liabilities but also increases with fair market value over time. It is also wise to establish a whole life insurance policy for your children when you start their college savings account.
Advice from an expert
Wealth management for beginners means your financial consultant understands modern portfolio theory (MPT). You need a planned approach to maximize the returns on your composite portfolio of assets. Your selected consultant should be able to easily describe to you how the short-term performance of individual investments is less important than how your entire wealth portfolio is performing quarter by quarter.
As previously mentioned, there are thousands of wealth management professionals across the country. One helpful way to distinguish among them is by examining the certifications of the portfolio managers. Any of these acronyms indicate professional status among those in the field (though none are required statuses for wealth managers):
- CFP (Certified Financial Planner)
- CFA (Chartered Financial Analyst)
- CPA (Certified Public Accountant)
- CAIA (Chartered Alternative Investment Analyst)
You can check out your potential consultant’s qualifications on FINRA’s investment advisor public disclosure database. If you don’t see one of these designations, then look for experience and tenure with the firm. Consultants need to have assets under advisement (AUA) and assets under management (AUM) in the double-digit millions at a minimum to demonstrate the proficiency, experience, and qualifications you deserve.
Determining which wealth management firm will work best for you
When you are starting your financial planning journey, some diligent research at the start will help you ensure that you will find a firm and team of wealth advisors who are backed by strong credentials and prepared to give you only the very best advice. SD Mayer has an AUA/AUM wealth management team known for taking the most comprehensive approach to financial planning for you and your family. We have in-house teams of tax experts, insurance brokers, and accounting professionals who work closely together with our wealth managers to help you feel confident in your financial plan every step of the way.
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