3 Wealth Management Assumptions That Might Hurt Your Wallet
NEW YORK (TheStreet) -- The wealth management advice population is vast and varied but not all wealth managers are the same. In fact, what you think you know about your wealth manager might not be true.
I'm in the business and in my opinion there are a lot of things that clients assume are true across the board no matter who they speak to about managing their money but simply aren't. Those assumptions, if false, can cost an investor both money and peace of mind.
Assumption One: Wealth Managers Are Investment Experts
In reality, most wealth managers are first and foremost relationship experts. What this means is that their job is to liaise with the investor and manage that relationship by responding to client requests and to recommend and sell products.Their primary responsibility is to bring in new assets by building up a book of clients. Yet, when many investors turn to a wealth manager to get help building an investment portfolio, they assume they are speaking to an investment expert. It may, or may not, be the case. Brokers, for instance, are under no obligation to recommend investment vehicles that are in a client's best interest -- called the fiduciary standard. Indeed, by regulation they only have to suggest "suitable" products based on factors consistent with age and risk tolerance. They are not required to compare the cost of their recommendations with alternatives. By comparison, a registered investment adviser (RIA) is legally required to act in a fiduciary capacity and to put a client's interests first. Certified Financial Planner practitioners, while not bound by law, often adhere to similar professional standards.
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