The Ultimate Guide to Choosing the Best Wealth Management Firm for You

Wealth management begins with recognizing the time value of money. When you take ownership of this fundamental principle, it motivates you to seek out resources that can help you to ensure your success in personal financial management. Reading wealth management books, articles, and researching individual topics online are all very useful in helping you to build a stronger understanding of how to make better financial decisions.

However, while self-education and development are always worthwhile endeavors, there are some aspects of finance that require decades of specialized knowledge and experience—when it comes to topics like these, having a good wealth manager on your team could make the difference between setting your financial future up for success, or heading toward a mess. So, with all the options for wealth management and financial advisors out there, how do you find the one that you’ll be comfortable and confident working with on the way toward reaching your goals?

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What does it mean to choose the best wealth management firm for you?

The finance industry is constantly changing, but that’s because the way business is done is always advancing. However, identifying your financial goals and electing your level of risk when you invest remains untouched. Wealth management is important to think about because it means you have prepared to handle not only the uncertainties of the stock market but also the uncertainties of life. The best wealth management firms help their clients stay on track with their goals, but they also know when and how to make recalibrations when needed. Here’s what any firm worth its salt should be able to help you with:

Setting Income Goals

You likely already have several financial goals in mind for yourself and your family, and you probably don’t need to hear that you need a plan to get you there. Begin to think about your current income and what you expect it to be in three or five years. If you’re one of the “lucky” professionals already pursuing their established careers for life, a ten-year income projection isn’t out of the question.

Retirement Planning

Retirement planning is a cornerstone of good finances. If you currently have a 401(k) account, have you checked if you’re on track for retirement? Can your contributions remain the same for the duration of your career or do you suspect you will need to do more? Does your company offer employee matching benefits? The best wealth management firms know the ERISA fiduciary rules for retirement savings accounts and will help you to choose between funds and contributions so that you can retire on time.

Self-Employment Retirement Planning

Do you own your own company? Do you have a Solo 401(k)? If not, what type of IRA account do you have? If you have employees, keep in mind that federal rules regulate how you can contribute to your own SEP-IRA account.

Managing Employment Incentives

Take the time to review all your company benefits, including restricted stock units (RSUs), non-qualified stock options (NQSOs), and employee stock purchase plans (ESPP). If you haven’t investigated all available incentives, make sure you begin to take advantage of all of them. Is your retirement date projection on track if you continue to contribute at the current rate? You may need to contribute over the matching amount.

Investment Account Aggregation

The key here is to know what all your accounts look like combined into spreadsheets or other money management tools. Mobile apps alone won’t do. You may have read somewhere that you should just contribute to your savings account every paycheck and not log-in to view your balance. This may seem to work for a while, but you may be able to draw a higher interest yield by shifting a percentage of your savings into a low risk fixed-income investment. You’ve heard the phrase before, “Make your money work for you.”

Perhaps you’ve had some success investing in single stock positions or ETFs on your own. That’s great! An experienced wealth manager can help you to capitalize on those equity gains by weighing out the risks alongside other asset classes in a composite portfolio of all your investments. You may not have investments in fixed income, global equity, hedge funds, and private markets yet but, over time, you will. This is why having a holistic wealth manager can make a difference in how your financial planning can take you where you want to go. You can’t make a strategic wealth management plan until you organize.

Establishing Your Personal Finance Goals

Everyone has personal financial goals. They want to have children (and set them up for educational success), buy a home, budget for vacations and, ultimately, retire comfortably. Wealth management isn’t simply investing to diversify your portfolio, although diversification is a key component of successful, long-term investing. If you’re wondering what’s the best wealth management firm, find one with an industry-leading certification and that demonstrates the commitment to get you closer to your goals.

Approach for Researching Advisors

When you begin your search for wealth managers, you will want to have your checklist ready. Some of the most important considerations you will need to have in mind involve your preferred working arrangements, fee structures, and what type of experience or specialized knowledge you require from your financial advisor.

What’s your ideal working arrangement?

Begin by deciding on your ideal working arrangement. Are you comfortable discussing financial details with a wealth manager over the phone or do you prefer to meet face-to-face? This is a big decision for many people, and sometimes it is generational. Older people usually prefer to meet with their advisors in person or via phone call and make decisions after a few consultations. They may not lean as heavily on online tools as Millennial- or Gen “X”-aged users.

Robo-advisors have also grown in popularity. They are powerful web-based financial tools, which have algorithmic functions that help the investor with portfolio asset allocation and making recommendations on balancing risk. Many available services also roll in market research data at no additional cost. However, limitations become apparent when you need to plan for your family or estate. You may save on fees, but are the savings worth it? Consider relying on a robo-advisor as a kind of supplement to your primary wealth management advisor. They can probably offer some recommendations if the online tools you need aren’t already included with your services.

Advisor fee structures

Wealth advisors earn fees on either the market value of your aggregated account, an hourly or quarterly flat rate, or sales commissions. Calculated fees should generally fall in the range of 0.9% and 1.5% of the combined market value of your accounts. The fee schedule should decrease each time you reach a higher AUM bracket. Ask to see these. Also, be diligent about researching commissioned-based financial advisors since they are compensated on the number of trades they execute.

Here’s an example of the type of fee schedule a reputable firm should be able to provide:

Total Assets Under Management Annual Fee
$10,000 – $499,999 1.2%
$500,000 – $999,999 1.1%
$1,000,000 and above 1.0%

Advisor independence and expertise

With all advisors, ask about the independence of their product selection and recommendations. Some fund managers offer advisors incentives to sell their products. You want to be sure you are getting objective advice and products which best suit your overall financial goals. In doing so, ask yourself the following questions as well:

  • What size firm will be a good fit for me?

    Does the size of the firm matter to you? Financial advisory firms can range anywhere from a one employee office to tens of thousands of employees in a large enterprise. What is most important is that they are registered with the financial industry regulatory authority (FINRA). Go to the BrokerCheck page if you want to verify an individual registered investment advisor or the firm itself.

  • What are the firm’s total assets under management?

    Find out the total assets under management (AUM) and assets under advisement (AUA), especially if you are considering a very small firm. The combined client accounts should have a value of at least $50 million. Small to medium enterprises (SME) should easily value from $150 to $750 million. Firms should be forthcoming about these figures. Any difficulty in finding out how much they manage is never a good sign. Large enterprises are good as long as they can offer you personalized attention and develop a customized plan that works for you and your family.

  • Do they have experience in tax strategy?

    Another great topic to bring up with your future advisor is how experienced they are with tax strategy and helping their clients manage the impact of capital gains. Knowing IRS rules and provisions of the recent Tax Cuts and Jobs Act (TCJA) will matter for you. Look for someone well-versed in maximizing your tax benefits through tax-loss harvesting, deductions, loss carry-forward, and net unrealized appreciated (NUA), and a lower adjusted gross income (AGI).

Differentiation from the field

Choosing the best wealth management firm is choosing one that views financial advice as an integrated discipline. They think about asking you the best questions because the choices that you ultimately make together is impactful. Estate planning and college savings accounts for even very young children aren’t premature thought exercises, but essential aspects of helping you create the life you want for yourself and your family. Holistic wealth management comes from skilled advisors who have your best interest in mind.

Firms like SD Mayer, with decades of wealth management experience, value crafting long-term relationships with clients that are based on trust and service, in the San Francisco Bay Area and well beyond. Contact us today to get started with an initial consultation.