Most people know what a CPA does (prepare taxes, help clients minimize tax hit, etc.) or an estate planning attorney does (draft wills and trusts, create estate plans and administer the probate of estates) and they assume they know what a financial advisor does. Unfortunately, there is a mismatch between perception and reality in many instances as it relates to what people think financial advisors do and what they actually do.
A friend of mine in the business gave me a statistic the other day that was staggering: 70% of individuals in “our” business hold themselves out as Wealth Managers; yet only 7% of that same group actually do anything more than investment management. I was somewhat shocked by this statistic at first, but the more I thought about the people I know and have worked with in the business it strikes me that it is likely (and sadly) pretty accurate (apologies to all of you who fit into that group). What does that mean for those of us who are “true Wealth Managers”? Unfortunately, it means that the population at large has come to equate the term Wealth Manager with Investments Manager – full stop.
Clients and prospects do not understand that a true Wealth Manager is someone who helps their clients with all aspects of their personal finances including:
Interestingly, if you look more closely at most self-proclaimed “Wealth Managers”, you will find that they often specifically state that they are not providing the services outlined above.
As an industry, we have done a poor job getting clients and prospects to expect anything more than pure investment advice from their financial advisors – even if they fancy themselves a “Wealth Manager.” A true Wealth Manager will do all of those items outlined above and will be in a position to coordinate all aspects of your family’s planning to ensure that family’s needs, goals, hopes and dreams are being looked after and nurtured to the largest extent possible. A true Wealth Manager recognizes that they provide far more than simple investment management. The clients of a true Wealth Manager understand that as well.
Many of the advisors out there who are focused primarily on investment management, have actually convinced themselves that they are, in fact, “Wealth Managers.” How can this be? Well, if you say something long enough, with enough conviction, to enough people, eventually you will start to believe this story yourself. It’s sad really. Simply wishing something were so does not make it so. You actually need to put in the time, you need to obtain the education, you need continue that education and you need to put what you have learned into practice.
So, how does one go about finding a true Wealth Manager? One of the best places to start is by focusing on industry recognized designations. Simply holding a securities license (Series 7 or Series 63 or the like) is not sufficient in my opinion. You need additional training. Looking for someone that is CERTIFIED FINANCIAL PLANNER™ professional or CERTIFIED PRIVATE WEALTH ADVSIOR® designee is a good place to start.