The relationship between wealth management companies and high-net worth Individuals (HNWIs) was one subject for research in The 17th Annual World Wealth Report.
An HNWI in this report is defined as... "a person with US$1 million or more in investible assets, excluding primary residence and other tangible assets".
Prepared by Paris-based global consulting firm Capgemini Service SAS, the report found that... "more Canadians are millionaires and although they may have extra money on hand they don’t necessarily want to work with more than one financial expert."
It states that among HNWIs in North America, 52.8% want to work with a single firm as opposed to multiple firms and that 50.9% prefer to have a single point of contact, such as a financial adviser, within the company.
It’s not uncommon for HNWIs to enter into a contract with wealth management companies (also known as capital management companies) that will manage part or all of their portfolios in a way which suits the clients' investment styles and comfort zones.
These companies will typically have a team of highly experienced individuals who do research to continuously evaluate investment strategies and monitor clients' portfolios. Client comfort and confidence is usually maintained by hiring a custodian, generally a well-known financial institution brokerage, to do specified buying and selling, in the name of the client.
This way, the money is always in the client’s name and there is no possibility for their funds to be mishandled. It guarantees the client is always in possession of their wealth and that they have not handed over money to any single charismatic individual making lofty promises.
Some companies set a limit of one million dollars for a personalized portfolio. Many work with a minimum of half a million and newer entries into the field will work with one quarter of a million.
If you already work with a financial adviser, it may be worth discussing whether it would be appropriate for you to enter into a contract with a wealth management company to consolidate your wealth at a single source. Many of these companies are willing to serve your investment needs whilst paying your adviser referral fees to continue providing you with planning advice at no additional cost to you.
An advantage of such an arrangement would be having your assets invested in a well-researched, balanced portfolio at a single location with a single point of contact. There are intangible advantages too, such as - if anything should happen to you, a partner who may not be well versed in investment and planning matters will be well served by a ready, trusted source.
There are many wealth management companies and, as with all financial matters, some care and research will be required on your part if that’s the way you wish to proceed. The ideal situation is dealing with a trusted adviser who has relationships with independent wealth management firms. 17th annual World Wealth Report link to the article