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  • Mike Komara

5 Things You Should Look for in a Wealth Management Firm

One of the most important decisions you'll make is selecting your wealth manager. With the right wealth manager, your portfolio will grow to meet your goals, and you'll preserve the wealth you've obtained for your lifetime and for your heirs. With the wrong wealth manager, you may get a cookie-cutter approach that means you may not have access to the money you need when you need it.

Here are a few things to consider when determining the best wealth management firm for you.

Their Business Model

The first consideration is how the firm makes its money. A firm's business model impacts how it will manage your wealth. Some firms make money by charging a commission when they buy and sell products. This may mean that you'll receive many pitches to move your money into and out of these products. If these are proprietary products, conflicts of interest are inherent. Others charge a management fee based on the size of your portfolio. As your portfolio grows, the manager earns more money.

Also, consider whether the firm is publicly held or privately held. Publicly held firms may face pressures to produce quarterly profits, which might affect when they present investment options.

Consider whether wealth management is the firm's primary business or secondary to banking or insurance. Generally, a firm whose core business is wealth management and whose goals align with yours is the best choice.

Their Track Record

You'll want to work with a firm that can demonstrate a consistent, successful performance over a long period of time. Consider your objectives, such as income generation or wealth protection, and research the firm to see whether they've accomplished them for other clients.

Also, ask for references and contact each reference to ask about their experiences. See whether the firm has won any awards and what its Better Business record looks like.

Consider the credentials of the adviser who will actually manage your money, which may not necessarily be the one you meet with when you first come to the firm. Ask where that adviser has worked in the past and whether they have earned any professional designations such as Chartered Financial Consultant or Certified Financial Planner, for example.

Their Best Fit Client

Firms often have ideal clients, and the better this ideal client profile matches yours, the better the fit will be. Some prefer to work with high-net-worth individuals, while others do better with those who have modest-sized portfolios. By asking the firm about the kinds of clients they typically work with, you gain a sense of whether their expertise aligns with your goals.

Their Products

You likely have an idea of what you'd like help with. Consider how that fits with the products and services that the firm offers. For example, you may need services beyond investment planning, such as estate planning. If you do, does the firm have that expertise?

Also, consider the firm's overall investment strategy, such as whether they use mutual funds or individual securities, and whether they will put your money only in their own products or customize a strategy using outside managers, if necessary. Then evaluate how well their strategy fits with your investment goals.

Their Relationship Approach

The most important factor in choosing a wealth management firm is how it relates to you and other clients. Firms that build strong, one-on-one relationships with each of their clients generally help those clients meet their goals more effectively than those that barely know their clients.

Be sure you understand how accessible your adviser actually will be to you. Consider whether the adviser will be juggling hundreds of clients or if they will have the time to focus on you as an individual and learn your goals. Smaller firms generally can get to know their clients more intimately and, through that knowledge, better link the management of the portfolio with the client's goals.

Working with a wealth manager is all about forming a relationship with someone who keeps your goals in mind and works to help you achieve them. By doing some research, you can find the best wealth manager for you.