Key Questions High-Net-Worth Individuals Must Ask Their Wealth Advisors

As a high-net-worth individual, selecting the best asset manager and financial advisor is crucial. After all, during your lifetime, you will be entrusting this person or business with the administration of tens of millions or maybe hundreds of millions of dollars. Make sure you hire the best candidate for the job by doing extensive research!

A reputable financial advisor will require an initial meeting so that you can assess each other and decide if this will be a mutually beneficial collaboration. To find out more about your possible companion, you should bring up a few important questions High-Net-Worth individuals must ask throughout that consultation. So, let’s discuss those questions: -

1. What is Your Minimum Asset Requirement?

First, find out the minimal asset requirement of a prospective financial advisor. To be worth your time and money, they should have a minimum asset requirement; ideally, you want a wealth manager who only works with customers who have a net worth of $10 million or more.

Once more, this indicates to you that they have vast financial handling knowledge and will have appropriate ideas and remedies for someone in your financial situation. 

Comparing you to someone who has, say, $1 million in their bank account and nothing else, you have different difficulties and defensive needs. Selecting the ideal professional for your requirements is in your best interest.

2. How Do You Charge for Your Services?

Knowing how your money adviser charges for their services is essential. While some advisors take a percentage of the assets they manage as payment, others charge a fixed fee. It is critical to understand which services are covered by the price and whether there are any extra costs for particular advice or transactions. Inquire about the frequency of portfolio reviews as well as any additional costs associated with this service.

3. How Do You Handle Tax Planning?

Taxes can greatly impact your investment returns, so having a financial advisor with experience in tax planning is essential. Find out if they deal with tax professionals and how they plan to minimise taxes on your assets. Finding out if they offer any tax-related services or advice as part of their entire offering is also crucial.

4. How Do You Incorporate Estate Planning?

As a high-net-worth individual, estate planning is crucial to ensure that your assets are protected and passed down to your beneficiaries according to your wishes. Ask your wealth advisor about their experience with estate planning and how they incorporate it into their services. It is also essential to know if they work with any estate planning professionals or if they can provide recommendations.

5. How Do You Handle Risk Management?

Risk management is an essential aspect of wealth management, and it is crucial to know how your advisor handles it. Ask about their approach to mitigating risk and protecting your assets. It is also essential to inquire about the measures they have in place in case of market downturns or unexpected events.

6. Do You Have Any Client References?

Asking for client references can give you a better understanding of your potential wealth advisor's services and how they have helped their clients. It is essential to speak with clients of different financial backgrounds to get a well-rounded perspective. Ask about their experience working with the advisor, any challenges they faced, and how the advisor helped them achieve their financial goals.

7. Have You Handled Clients Similar to Me?

To get even more specific, you can find out if a financial manager has dealt with someone comparable to you. "Similar" to you doesn't refer to insignificant things; rather, it refers to someone who shares your wealth objectives, issues, and possible dangers.

Let's take an example where you are a wealthy business owner, and your main concern is safeguarding your assets from litigious parties, former spouses, or other threats. 

It's encouraging if the wealth manager has dealt with issues similar to those in the past since it indicates they have the knowledge and resources necessary to provide you with the same solutions.

It's a warning sign if a financial advisor acknowledges that they haven't worked with clients like you. They might still work out, but you're probably better off working with a company that specialises in solving difficulties like yours.

8. How is the advice I'm getting any good?

Those who are extremely successful don't waste time attempting to solve problems on their own. They frequently search for experts who can see past the obvious and provide the answers to issues that go unanswered. It's important to focus on the most pertinent tactics and ask the questions that most other professionals won't when you're sitting down with a prospect. Once more, I usually advise responding to this query with another query, such as “Have you evaluated strategies X, Y, and Z?”

9. Who is your custodian?

Ideally, instead of serving as their custodian, your financial advisor has enlisted the services of an impartial custodian, such as a brokerage, to hold your investments. That offers a crucial safety check. 

"My clients can go online at any time to double-check if I send them performance information that includes the amount I claim is in their account," adds Finn.

10. How Long Do Your Clients Stay with You, On Average?

Find out how long a typical client remains with a financial advisor by asking them. You want to know that the advisor has at least 20 years of customer retention. At your level, managing your wealth takes decades, so you want to avoid constantly having to change partners, which may be expensive and time-consuming.

Anything further from the wealth manager should raise serious concerns. Rather than a financial advisor who is in it for the money, you want a wealth manager who is devoted to and committed to their clients. Loyalty and relationships are very important in the field of asset preservation.

11. If something happens to you, who will take over my account?

At some point, even the best advisors will retire. Regretfully, some advisors need to prepare for the unavoidable. 

A Cerulli Associates report from 2022 indicates that 25% of advisers who intend to retire in the next ten years need to be clearer about their succession strategy. Furthermore, only some people who have a formal plan have initiated the succession process.

Retirement is one of many factors to think about, though. Also, it's not uncommon for an advisor to advance in their profession to the point where they are no longer able to serve as your advisor due to internal promotions or opportunities.

Knowing who would take over your account is crucial. What qualifications and experience do they have? In the event that they don't often work with you, how involved are they with your account right now, and is there a procedure in place to get them up to speed? Do they have experience with similar clients to you, so they know what you need and what your goals are at this point in your life?

12. Have you ever been subject to disciplinary action?

Confirm that the advisor has a spotless record. You can check an advisor's background with the Financial Industry Regulatory Authority (FINRA) to determine whether there are any regulatory actions or complaints against them.

A spotless record is essential for a truly fiduciary financial advisor. It's imperative to confirm that the guidance you obtain serves your best interests. It's a good idea to enquire about any prior complaints a financial advisor may have in order to maintain transparency.

The Bottom Line

For high-net-worth individuals, selecting the appropriate wealth advisor is essential since it can have a big impact on their financial future. These are important questions to ask in order to learn more about the advisor's background, expertise, and style of investing. Working with a dependable and knowledgeable wealth advisor who can assist you in reaching your financial objectives and who truly cares about your best interests is crucial. Thus, before making any judgments regarding your financial management, make sure to ask these questions.