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‘So how do you choose the ideal wealth management firm?’

James Anderson, founder and editor-in-chief of

In a low interest rate environment, investors are struggling to produce a positive return after inflation, tax and fees, and are frustrated by their investment managers’ lack of performance.

So how do you choose the ideal wealth management firm? First you need to understand your financial goals and expectations, today and over time, to establish what type of service you need. You might want a full wealth management service, including all your assets, or investment management of your liquid assets only, or advice about financial planning and structuring, or a combination of any of these.

There are significant differences between the types of businesses that you might need, so finding an appropriate firm can be challenging, even for a well-qualified professional.

Once you have settled on the kind of firm you need – and assuming you need a firm to manage an investment portfolio – asking the right questions at the outset will help confirm your instinct, and give you a head start in managing both the relationship and your expectations.

Here are some initial questions to ask:

Does the manager have a distinctive investment process? If so, what is it and does it match your requirements?

If there is more than one house investment style, do investment managers operate in teams or alone?

What are the firm’s investment policies? How are these enforced? Are there restrictions on what the firm invests in, what they buy and sell, and when?

Roughly how many holdings are there likely to be in a typical portfolio?

If you are investing cash, how long it will take to invest and will the firm offer you a competitive rate of interest on any cash held?

Will the firm create personalised performance benchmarks that meet your individual risk profile from the outset?

Are investment performance track records available?

If the firm relies on external research, how do they obtain the information required to make investment decisions and how do they pay for this? Are there any potential conflicts of interest and, if so, do you understand how they might affect management of your portfolio?

Does the firm use or sell in-house or group products, or accept institutional-level commissions? Are these all reported and rebated to you?

What international exposure are you likely to have in the portfolio?

What turnover of your holdings is expected in an average year? Could there be a temptation for the manager to churn the portfolio?

Do investment managers have revenue targets and what is the firm’s remuneration policy?

How many clients does the firm have and what is the size of an average client’s portfolio? Then ensure your relationship is neither too big nor too small.

How much money and how many clients does each manager look after? Will it be a client relationship manager, an investment manager or both, or a team who will look after you?

What are current levels of staff turnover?

What happens to your portfolio when your manager is away?

Could there be any material change that might affect you in the way the company is structured, your manager’s own circumstances or the way you will be charged in the foreseeable future?

How frequently will the firm meet with you and how regularly will they send client reports?

Will they charge for any ad hoc reports you might require?

Will reports show investment return comparisons against agreed benchmarks in your base currency and month-end valuations, as well as the valuation at the report date?

Only when you are happy the prospective firm can deliver both the performance and the service that will meet your expectations, should you appoint them. Thereafter, make sure you keep asking questions, and re-evaluating the quality and consistency of the service you are paying for. As the past year has shown, circumstances can change quickly.

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