When a new client comes to TindleWealth from a competitor it is usually for some combination of these three reasons:
1. They are unhappy with the level of service they are receiving
2. They think they are paying too much in fees
3. They suspect the performance of their portfolio has been sub-par
Given the above and all that has occurred this year, we thought it would be helpful to outline what you, as a client of a wealth manager, should expect for the fees you're paying.
You are paying a wealth manager a lot of money for a personalised approach. You should expect nothing less than a 5-star experience.
Some questions to ask:
1. Is the offering truly personalised or are you simply being put into a model portfolio like everyone else? If it is the latter and that is all that you require, Vanguard offers a basic 'model portfolio service' for 0.37% per year - far shy of the 2% or more you are likely paying your wealth manager.
2. Are you receiving personalised financial advice? We believe that it is difficult to tailor a bespoke portfolio to someone without considering their overall financial life. Perhaps the biggest value TindleWealth adds is marrying a financial plan - one that we help our client to create - with the most appropriate investments for that plan. We also ensure it is tax-efficient by advising on ISAs, pensions and other 'tax wrappers'. Then all parts of the client's financial life are working together.
3. Is your wealth manager doing the simple things well? Do they always get back to you quickly? Do they proactively reach out in challenging times, like the one we experienced in March? Do they liaise with your accountant when you want them to? There is simply no excuse for poor service in this business.
It is usually very difficult for prospective clients to explain to me how much they are paying for their current service. Many that come to see me intuitively know it is too high - or have read in the press that their wealth manager charges 'sky high' fees - but they cannot determine how much they are actually being charged.
In fairness to the industry, there are various layers to a typical offering and fees will vary from client to client. There really is not one easy sticker price to quote. But it's not that hard to tell clients, in an easy-to-understand way, what they are paying.
We approach this issue by making clear to prospective clients the total, all-in costs that they should expect to pay as well as the fee that goes directly to TindleWealth. In almost all cases, clients with less than £1 million to invest will pay total costs of around 2% per year including 1% per year that is paid to TindleWealth. These are figures our clients can easily remember and could quote to any other wealth manger if they so wished.
Our minimum annual fee is £2,400 (1% on £240,000 assets under management) and our fee declines substantially for clients with more than £1 million to invest. You can see examples of our fees in practice in our Terms of Business here.
Many prospective clients come to us because they feel that their portfolio has performed poorly but, as with fees, they cannot explain precisely why they think that.
The challenge with measuring performance is that it needs to be compared to something. Knowing that your portfolio has made or lost 5% this year is largely meaningless without a suitable benchmark (a 'benchmark' is exactly what is sounds like: it is the standard against which the performance of your portfolio should be judged).
As a client, you should understand why a particular benchmark is being used for your portfolio - and then you should feel confident enough to challenge your wealth manager if, over the long term, your portfolio has consistently performed worse than your benchmark.
If the principles of a 'benchmark' are unfamiliar to you then it might be worth having a conversation with a wealth manager that is prepared to be more transparent about the performance of your investments.
Is it time for a second opinion?
We would, of course, welcome the opportunity to review your current circumstances and to explore how we could provide you with a bespoke wealth management experience that is worthy of the fee you pay. Please contact us below to learn more or reach out directly to our Director of Wealth Management, Scott Tindle, CFA at firstname.lastname@example.org.