Here is what a good wealth manager should have:
Education: No matter how big a fan of the movie 3 Idiots you are, the fact remains that there is no alternative to formal education. Similarly, for properly comprehending the complexities of markets and economics, your wealth manager should possess relevant education. Unfortunately one of the most relevant questions that an investor should be asking while selecting his wealth manager, is rarely asked. Some of the relevant degrees can be MBA, CA, CFA or any finance or economics degree.
Experience: The biggest challenge in managing a portfolio is managing market cycles and economy cycles. Even with all the fancy degrees, on the-job learning can never be discounted. In rapidly dynamic markets, a wealth manager who has witnessed rapid ups and downs of the markets will certainly be a better fit.
Emotional quotient: How did you behave when the markets tanked 40% during the covid pandemic? Now imagine your wealth manager losing his temper during this crisis. Best of the investors count emotional quotient as their biggest tool when it comes to the markets. Even though it is very tough to gauge something as intricate as emotional quotient, do try to make an assessment of how your prospective wealth manager is placed on an emotional scale.
Ethics: This is again something which is both subjective and hard to evaluate, but irrespective of how prudent a professional is, I am sure you will never leave your money at the mercy of an unethical person.
Expertise: How does your wealth manager select where to invest your money? Does he have an algorithm to analyse potential investment products? What is his universe of products? How did he decide that particular product/portfolio is suitable for you ? Does he have a portfolio approach or a product approach?
Endorsement: The first time I was asked by a prospective client about getting connected with an existing client, I was taken aback. All kinds of apprehensions took charge of my mind. But eventually, I realized that it’s the best tool to build trust with prospective clients. Nobody can give you a better idea about service quality than an existing client.
Expansion: Proof of the pudding lies in eating it. How much assets under management does your wealth manager manage? How many clients do they have and in how many years? Such questions will help you understand how deep his book of clients is.
Incentive: Getting goodies, junkets, events or fancy dinners from anybody does bring a good feeling, but that should certainly not guide your selection process of a wealth manager.
Brand: A strong brand of wealth management does bring credibility and trust, but that alone should not tilt your decision to select a wealth manager. At the end of the day, your experience will depend on the quality of your wealth manager as a professional. A good institute can only empower wealth managers, but the latter have to implement the practices and recommendations of the institute.
Product bias: Does your wealth manager keep pushing for certain products? If so, what is his interest in pushing those products? Limited bouquet: In current times of global and domestic complexities and dynamic objectives, does your wealth manager come with a large spectrum of products?
Bad conversation skills: Wealth management not only involves understating markets, economy, and products, it also involves understanding the needs and risk appetite of the investor. Does your wealth manager ask you enough questions, does he understand your requirements, does he always say “yes” to you or does he counter you also?
In my decade-plus years of experience as a wealth manager across India and UAE, even the toughest of clients asked only a partial set of the above questions. As anything that is highly subjective, this process is also open to addition, subtraction, or updation. But the moot point is, “whether you are making an effort to decide a framework to select your wealth manager or not”.
Every great journey begins with a single step. In the never-ending journey of wealth management, selecting a good wealth manager remains the first step.
