Wealth managers: the lowdown

27 Jul 2012 | Guides - Comment now

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Wealth managers: the lowdown

How do you decide whether to manage your investments yourself or use a wealth manager? What Investment explains.

Wealth managers are used by people with substantial sums to invest. They will start taking an interest in you if you have at least £100,000 of investable assets, excluding property and your company pension scheme, if you have one.

However, the bigger names will have much higher thresholds. Coutts, for example, has reportedly raised its floor from £500,000 to £1 million.

Clearly, the more money you have, the better value you are likely to get from a wealth manager. The fees and charges are unlikely to be worthwhile for smaller investors, who may prefer to rely on their own knowledge or refer to a financial adviser when they have big decisions to make.

For those who do have substantial sums, a good wealth manager should be able to remove some of the burden and hassle of running your portfolio, improve your returns by applying their experience and knowledge, and give you a complete, up-to-date picture of how all your investments are performing.

Types of wealth manager

There are three main types of wealth manager:

  • Discretionary managers, who will listen to what you want from your investments (for example, an income, capital growth, your risk appetite, and so on) then run your money from day to day. This is good for investors who do not have the time or the inclination to make their own detailed decisions

  • Advisory managers, who will provide advice but leave you to make the final calls and carry out transactions yourself (similar to a regular financial adviser but aimed at wealthier clients)

  • Managed advisory, a ‘halfway house’ whereby the wealth manager runs the portfolio but with more guidance from the investor

Your wealth manager should be able to offer useful advice, but like a GP, may refer you to a specialist in areas such as pensions or life insurance.

Getting the most from a wealth manager

Key areas to consider when choosing a wealth manager are cost, the services you need, and how well you get on with the person who is going to be responsible for your money. A trusting relationship is vital.

It’s also sensible to check an adviser’s qualifications on the Financial Services Authority’s register.

You’ll need to decide how often you want to meet. In the early stages of the relationship, when you are building up trust, you may want to meet your wealth  manager more frequently.

Just because a wealth manager is running your portfolio, you have no legal redress if the performance is disappointing. You would only have a claim against a wealth manager if you could show they had been negligent, or invested in products that were unsuitable for you given your stated investment goals.

However, you can still take a complaint against a wealth manager to the Financial Ombudsman Service.

Related investment guides

Building a portfolio – what to bear in mind when making your own investment decisions

Making cash work harder – advice for those who want to leave some of their savings in cash

Related topics: Asset allocation, Wealth management

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