Building, preserving and expanding
sizeable financial portfolios is something that educated investors should not leave to chance. Rather, they should
rely on qualified wealth management advisers to guide them through the process
and choosing the right wealth management
firm should not be left to chance either.
Ideally, the wealth management advisers
selected should be on the same side of the
table as their clients, and should be selected with a great deal of due diligence. After
all, choosing the right financial course is
one of the most crucial decisions investors
can make during their lifetimes.
Smart Business talked with Christopher
Bart, a managing director and principal
with Aurum Wealth Management Group,
about the significance to an investor of
selecting a wealth management firm and
how to formulate a specific investment policy statement that is a roadmap to achieving a client’s financial aspirations.
Who should be concerned with wealth management?
Theoretically, everyone who has assets
should be concerned with protecting and
growing them in a prudent manner. There
comes a time, though, when portfolios outgrow their owner’s abilities to manage
them by themselves. So individuals who
have a complex or unique situation for
instance, someone who has a concentrated
stock position, has sold a business or has
experienced another life-changing event
should be particularly concerned with
wealth management in general. Individuals
who are in any of those positions should
consider working with a wealth management adviser rather than a professional
How does a wealth management adviser differ from a professional money manager?
Wealth management advisers oversee a
client’s complete portfolio of investable
assets. As a part of their overall investment
strategy, wealth management advisers will
often hire professional money managers to
manage a portion of a client’s wealth. The money managers are responsible for the
day-to-day management of a client’s investments, while the wealth adviser is responsible for the selection and management of
the money managers.
Is there a monetary figure at which clients
should consider working with wealth management advisers?
Every individual’s net worth is different,
but clients should consider investing their
assets with a selection of professional portfolio managers. Each manager has its own
investment minimums, and to achieve the
desired results, a client’s assets need to be
spread out among multiple money managers. Therefore, to properly execute a
wealth management strategy, a client will
often need a minimum of $500,000 in
What should clients look for when selecting a
wealth management firm?
The most important thing to look for is a
wealth management firm that follows
some type of disciplined process so that
clients have a clear understanding of how
their assets will be managed.
Clients should be looking for personalized service, a tailored investment approach, and portfolio transparency and
flexibility. Clients should find an adviser
who does not have a hidden agenda or who
wants to push his firm’s proprietary products. Rather, they should look for advisers
who are sitting on the same side of the
table as they are, acting as advocates for
What would a disciplined investment process
The ideal process can be broken down
into three easy steps.
First is the discovery phase, in which the
adviser helps the client establish his or her
goals and objectives. That involves factors
like the client’s time horizon, risk tolerance,
return expectations and cash flow needs.
The answers to those questions will allow
the adviser to develop an investment policy
statement and a suitable asset allocation.
The next stage is to determine the best
qualified money managers to manage the
unique assets. This is the phase in which
wealth management firms should add
value. It involves an extensive process to
screen and select the specific professional
portfolio managers. Quantitative and qualitative checks and balances in this part of
the process make sure the professional
managers chosen are credible. For instance, there must be continuity in the
manager’s employment and consistency in
his performance. A 50 percent increase in a
portfolio one year that is given back the
next is neither consistent nor beneficial to
The final part is ongoing oversight of the
portfolio’s performance. This involves analyzing returns, measuring the volatility of
the overall portfolio, evaluating the portfolio managers’ performance by comparing it
against peers and respective benchmarks,
and monitoring overall asset allocation. All
these steps are important, and can be accomplished best if advisers and clients
work closely together.
CHRISTOPHER BART is a managing director and principal with
Aurum Wealth Management Group in Mayfield Village. Reach him
at (440) 605-7276 or [email protected].