Before we dig into Private Wealth Management, let’s make a helpful comparison to coffee for a moment.
Private Wealth Management is Like a Great Cup of Coffee
There are big coffee chains everywhere. You see them all the time. They’re familiar. They’re obvious. But anyone who really appreciates coffee can tell you that those places usually serve a mediocre product. That’s often the unfortunate side-effect of very large companies: quality dilution.
Big banks are similar, you see the big banks on every street corner, but are they really the best choice? Are they serving you a quality product?
There’s one place that often has a great cup of coffee: your small local coffee shop. They’re always excited about a new roast. The employees are almost too passionate. And it doesn’t take long before they all know your name.
Private Wealth Management is your local coffee shop—they come with a whole host of advantages, but they can be hard to find. They’re often a hidden gem.
First, What is Wealth Management?
Wealth management is your personalized strategy for financial planning and investment management. It encompasses your whole financial life: retirement planning, tax optimization, estate planning, risk management. . . the list goes on.
Ideally, your wealth management advisor will partner with you to create a strategic plan that gives you long-term financial stability and growth.
Wealth Management is Relationship
Great wealth management planning can only come from a strong understanding of who you are as a client. It has to consider your current financial position and what goals you have.
Your advisor needs to know all about you: How much risk can you tolerate? How important is charitable giving for you? What sort of new investment opportunities would excite you?
If you don’t have a strong personal relationship with your advisor, you’re probably just being moved through a sales funnel and shown a tired menu of financial products. That’s the ‘quality dilution’ version of wealth management, but there are better ways to grow your wealth.
A Comparison: Big Bank Wealth Management VS Private Wealth Management
You’ve heard commercials from big banks, seen their digital ads, spotted their branch locations, and maybe you’ve even done some google research: ‘IG wealth management’, ‘RBC wealth management’, ‘Scotia wealth management’, etc.
Since they seem to be everywhere, it’s worth taking a close look at how they work—and how they don’t work.
Big Bank Wealth Management and Its Limitations
Big banks offer a range of wealth management services including financial planning, investment management, private banking, trust and estate services, and insurance solutions. They provide access to various investment products such as mutual funds, ETFs, stocks, bonds, and proprietary financial products.
However, there are several limitations to consider (several of which make it very difficult to create a personalized wealth management strategy):
Volume-Driven Service
Advisors at big banks often manage a large number of clients, which can reduce the level of detail and attention given to each individual. This volume-driven approach can affect the quality of advice and the personal relationship necessary for effective wealth management.
Less Personalized Service
With such a large client base, big banks often rely on standardized strategies rather than tailoring services to each client’s specific needs. This can result in less frequent or less personal interaction with advisors, impacting the overall service experience and the advisor’s familiarity with a client’s unique situation.
Incentivized Product Promotion
Big banks often promote their own financial products, which may not always be the best fit for clients. Financial advisors at these institutions might have sales targets or incentives to push proprietary products, potentially leading to biased advice.
Limited Investment Options
Big banks may offer a more narrow range of investment products, often focusing on their own mutual funds, ETFs, and other in-house financial instruments. This restricted choice can limit the ability to diversify investments or take advantage of potentially higher-performing options available through private wealth management firms.
Slower Decision-Making
Larger institutions may move slower and are far less agile. This can hinder their ability to quickly adapt investment strategies in response to emerging opportunities or risks, if they do at all.
Higher Fees
Big banks will often have higher fees for their wealth management services, impacting overall returns (especially compounded over multiple years). In-house products might also come with higher expense ratios compared to similar options available through independent advisors or boutique firms.
Focus on High-Net-Worth Individuals
Big banks might prioritize ultra-high-net-worth clients, potentially leading to less attention and fewer resources for clients with smaller asset bases. This focus can result in a less personalized experience for those not in the top wealth tiers.
Advantages of Private Wealth Management: The Most Common Choice Isn’t Always The Best Choice
For many people, the large financial institutions are the first to come to mind. But remember that coffee analogy: you might think of Tim Hortons first, but that doesn’t make it the best coffee in town.
That search term we mentioned, ‘IG wealth management’, gets almost 15,000 searches in google every month. ‘RBC wealth management’ and ‘Assante wealth management’ both also get thousands of searches.
By contrast, ‘Private Wealth Management’ gets well under a thousand searches—lots of people don’t even know they have another option which is a hidden gem.
Private wealth management comes with a lot of advantages:
Personalized Attention
Independent wealth management firms typically prioritize building strong, long-lasting relationships with their clients. This allows them to take the time to understand your unique financial goals, risk tolerance, and investment preferences.
Long-Term Focus
They focus on long-term relationships and financial success, emphasizing ongoing planning and adjustments as life circumstances change. Independent advisors often provide a holistic approach to financial planning, considering all aspects of a client’s financial life, including retirement planning, tax strategies, estate planning, and risk management.
Unbiased Recommendations
Independent firms are not tied to specific products or providers, allowing them to offer unbiased, objective advice tailored to the client’s best interests. They can tailor investment strategies to meet the unique needs and goals of each client, offering a more personalized approach.
Potentially Lower Fees
Independent wealth management firms often have lower overhead costs compared to big banks. This can translate to potentially lower management fees for you, the client. Additionally, their fee structures might be more transparent, allowing you to better understand what you’re paying for.
Quick Decision-Making
Smaller firms can adapt more quickly to market changes and make prompt decisions to benefit their clients. They often employ innovative strategies and solutions, leveraging new technologies and investment opportunities.
Dedicated Support
Independent advisors act as advocates for their clients, providing dedicated support and guidance through various financial decisions and life events. They maintain proactive communication, keeping clients informed and engaged with their financial plans and investment strategies.
Conclusion: It’s Time to Elevate Your Financial Game
We didn’t just give you a list of the advantages you could find with private wealth management—it’s what you will find. We know because that’s how we designed Selkirk Wealth Management at Wellington-Altus Private Wealth
For the fifth consecutive year, Wellington-Altus Private Wealth has been Canada’s top-rated investment dealer according to the Investment Executive 2024 Brokerage Report Card.
Our team is intentionally small because we’re not trying to serve everybody; we don’t want to be a big bank, we don’t want to be the chain coffee shop. We specialize in a number of areas, including setting business owners and retirees up for financial success.
We’re here to build relationships with our clients and offer personalized financial advice. We’re here for you.
Book a meeting with us and let’s talk about elevating your financial game.
