This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
See Cramer's multi-million dollar portfolio for FREE and get his new book Get Rich Carefully! Learn More

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.

Assumption Two: Your Wealth Manager's Pay Is Tied to How Well Your Investments Perform

Since most investors pay a fee tied to the amount of assets they have with a wealth managers, many assume that payment alone is how their adviser earns his or her income. The following assumption is that if those investments do well the adviser makes more money and therefore that is what the adviser is focused on.

In reality, the fee tied to assets under management is often just a part of how advisers can be remunerated.

There are many third-party payments that in effect, "hide in plain sight." By that I mean they are spelled out in lengthy disclosure documents. What this means is that an adviser could be earning money from recommending certain products, money that is "costing" you in addition to the fees paid which are tied to total assets.

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
DOW 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 +2.54 0.14%
NASDAQ 4,095.5160 +9.2910 0.23%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs