Lee Goggin runs through the key reasons to change wealth manager and highlights how to go through the process.
While newcomers to professional wealth management advice make up many of the users of findawealthmanager we find that consistently around 40% of people are unhappy with their current provider who want to see what else might be out there.
Often, clients that switch wealth managers tell us they had been apprehensive, but were pleasantly surprised; fears that changing provider would lead to hassle, mistakes and expense were unfounded.
Changing wealth manager: myths that need busting
It’s easy to let inertia stand in the way of a better relationship, and there are a number of pervasive myths that need to be busted to help investors get over that.
1. Your old provider won’t be obstructive
They won’t want to see you leave, but any reputable firm will not stand in your way (nor are they allowed to). Clear procedures will be in place to facilitate your transition.
2. You don’t need to have the “divorce conversation”
Having the appropriate permissions in place, your new wealth manager can arrange for the transfer of all your investments and history without bothering you further. You don’t even need to say goodbye if you don’t wish to as a letter of authorisation enables your new wealth manger to write to the existing one to commence the move, including arranging for regular payments.
3. Changing shouldn’t be costly
You should only ever incur reasonable and transparent “costs of doing business” like administrative fees (these may be slightly more for larger, more complex investment portfolios). Punitive exit charges should never be held over investors’ heads, and even if you are locked into an investment programme your new wealth manager will be able to suggest effective transfer methods.
4. You won’t be drowning in paperwork
There are unavoidable procedures, but new technology is making identity and Anti-Money Laundering checks pain free. Accounts can very often be up and running in no time.
5. Changing can be a lot faster than you think
Assuming a mainstream portfolio, most transfers can be completed in three to six weeks (directly-held equities and bonds can be moved in a matter of days, funds a few weeks and more exotic offshore vehicles a couple of months). The emphasis will however be very much on transferring your assets efficiently, weighing the costs of transfer or disposal.
Should you stay or should you go?
The precise trigger points for change vary hugely in our experience; some clients are more focused on service standards, others, the hard numbers. But there are a “red flags” that should always make you reconsider things.
1. Fees feel high (or incomprehensible)
Excessive management fees are a huge drag on performance. Good wealth managers will always explain in full and assist comparisons; the firms we work with are all committed to transparent, better-value fees.
2. Performance has been disappointing
Good service can compensate for occasional blips, but don’t tolerate sustained periods of poor returns. Compound growth means the sooner you move from “acceptable” to “strong”, the better.
3. Service standards are slipping
Complacency can seep in over time or it might be that a corporate reshuffle has left you feeling neglected. The departure of a trusted adviser is also a good juncture for change.
4. You no longer feel understood
Your wealth manager should have a holistic overview of your investments, tax exposures and financial goals, amending strategy as your needs evolve. If you no longer feel understood, it may be time to call in a fresh pair of eyes. There is usually always something that can be done to make your wealth work harder.
Is 2019 your year to upgrade?
Moving to a new wealth manager is likely to be far easier, quicker and stress-free than you might think, and the potential benefits may make change a no-brainer. We’ve helped many thousands of investors find providers offering better performance, service and fees, and we would always advise anyone less than delighted with their current provider to explore what else is on offer. Breaking up really isn’t hard to do and it may be very much better for your wealth in the long term.
Lee Goggin is co-founder of findawealthmanager.