There’s no one-size-fits-all approach to wealth management, so finding the right financial firm to manage your money can take time. However, understanding the pros and cons of wealth management and knowing what to look for, and avoid, in a financial firm as you begin the process can fast track your path to a solid financial plan.
In this blog post, we’ll discuss the potential benefits and disadvantages of embarking on the wealth management process to help you find expert guidance that suits your needs.
Pros And Cons Of Wealth Management
Benefits Of Wealth Management
When properly executed, the wealth management process answers your questions and provides solutions to reach your financial goals. It often includes drafting a road map to your financial future and helping you implement the necessary steps to get there, such as making the right investment decisions for your personal circumstances.
Now, let’s dive into the pros and cons of wealth management with a financial firm, starting with the advantages.
1. Fiduciary Guidance
When you work with a licensed fiduciary, that individual is legally obligated to conduct business in a way that serves your best interests. This is why it’s essential to find a fiduciary financial advisor to manage your wealth, so you’ll have peace of mind that they’ll craft a financial plan with your needs at the center.
2. Fee-Only Service
Have you ever asked yourself, “Are wealth management fees worth it?” When you work with a fee-only firm, you’ll never have to worry about an advisor trying to sell you a product simply to earn a commission. Fee-only firms typically charge a percentage of the value of your assets under management, or an hourly or flat rate.
3. Industry Credentials
Always seek out a financial advisor who holds the CERTIFIED FINANCIAL PLANNER® (CFP®) designation. This certification ensures the advisor has a bachelor’s degree at minimum under their belt, as well as real world experience in the industry, and that they’re held to high ethical standards. You should also ask your advisor how they stay up to date with changing legislation, such as tax law.
4. Specific Expertise
Some clients prefer to work with financial advisors who have similar clientele. For example, if you’re an attorney, you may wish to find an advisor who primarily works with attorneys. Alternatively, you may base your search on an area of expertise, such as tax-efficient investments. At Curio Wealth, we believe wealth management should focus on financial planning, investments, and taxes, so we recommend finding a firm with experience and expertise in all three areas.
Disadvantages Of Wealth Management
We’ve covered the benefits, now it’s time to consider the potential risks of starting this process with a financial firm, so you have a complete understanding of the pros and cons of wealth management. Avoiding a financial firm with these red flags can save time and money, and keep you on track to achieving your financial objectives.
1. Non-Fiduciary Service
While there certainly are respected non-fiduciary financial advisors, it’s best to avoid entering into an arrangement where your advisor does not have a legal obligation to act in your best interest.
2. Commission-Based Fees
You need to know that the advice you’re given about financial products is right for you, without any conflicts of interest at play. The only way to be sure is to be cautious of financial advisors who receive commissions for their services. Always ask how your advisor is compensated.
3. Registered Complaints
The Financial Industry Regulatory Authority (FINRA) offers a free tool called BrokerCheck to search for complaints against a particular financial advisor. You can also use the tool to check which credentials your advisor holds.
4. Lack Of Experience Or Big Picture Thinking
It goes without much explanation that you should look for a financial advisor who has been around the block and can help you navigate complicated situations, should they arise. In addition, it’s wise to avoid firms that don’t take your full financial picture into consideration because this can result in unnecessary costs, for example, at tax time, if your advisor doesn’t take a proactive approach to tax planning.
Wealth Management To Suit Your Needs
At Curio Wealth, we believe that, as the client, you’re the most important person in the room. When you’re evaluating wealth management firms, ask as many questions as possible to ensure you feel comfortable before moving forward with a particular financial advisor.
If you’re looking for a financial firm that will always take the time to pick up the phone and answer your questions, we’d be happy to help. Schedule a call with us today to get started.
