Updated 11 April 2022
When your assets pass a certain level, managing them can become a job in itself. Holding wealth in the form of cash can be inefficient, so you may want to make it work harder through investments (like opening a stocks & shares ISA). However, managing a large portfolio of investments yourself can be time-consuming, even if you have the necessary expertise. For this reason, many such individuals engage a wealth manager to oversee their assets as a whole.
Many independent financial advisers specialise in wealth management. Besides saving you time and effort, they can help you make the best decisions, select the best products, ensure that your portfolio remains aligned with your life goals, and that your wealth fulfils its potential.
Here are the main areas in which a wealth manager provides ongoing support.
Your wealth manager can help you find the best balance of cash savings and other investments, based on factors such as your life goals, your attitude to risk, and other personal circumstances. This will help you find the optimum balance between growing investments and accessible funds. As your assets grow and your circumstances change, your adviser can rebalance your portfolio to suit your new situation and keep it aligned with your needs.
Your adviser can also help with other aspects of your portfolio. For instance, if you want to invest in property, they advise you on the extent to which you can do this without jeopardising your other goals. Your adviser can also help you create an investment strategy to suit your needs.
If you run a business you’ll probably use an accountant to advise you on its finances. However, your wealth manager can work alongside your accountant to maximise the value it generates for you, and vice versa. For example, they can help you find the best way to take an income, separate personal and business assets, and invest business assets effectively. They can also advise on cash flows and budgeting.
As a higher earner, your pensions will be a cornerstone of your overall financial plan. You will have the potential to benefit from higher or additional rate tax relief, and you may want to supplement any workplace pensions with your own arrangements such as a Sipp. Your wealth manager can advise you on how to maximise the advantages of your pensions.
However, you may be vulnerable to both the annual and lifetime pension allowances. Your adviser can ensure that you do not accidentally exceed these limits, and so help you avoid a hefty tax bill.
If you spend only some of your time in the UK and some of it abroad, it may affect how you pay income tax. A good wealth manager should be an expert in expatriate taxes, helping you work out how much tax you owe in each country where you live and work, and ensuring you are not overcharged.
They can also advise you on your UK tax status and how to maintain it, and explain the practical differences between being resident and being domiciled in the UK.
Leaving an inheritance can be a major undertaking if you have a lot of assets. Although it is possible to plan ahead to reduce the final inheritance tax bill, with a large estate you will realistically have to start taking action many years in advance. Here a wealth manager can be invaluable, as they can start to reduce the size of your taxable estate in the most strategic way (often using trusts), while leaving you sufficient accessible assets to maintain your lifestyle.
As wealth management is generally an ongoing service, you will usually pay your adviser a retainer for their services. This may be a regular flat fee, or a percentage of the assets under management. This can work out more economical than paying a number of different fund managers to take care of multiple portfolios.
Talk about payment options at your first meeting with a prospective wealth manager. Ask them to state their fees clearly, and to explain in detail exactly what you will receive for that money. Also, don’t hesitate to shop around for a number of quotes and compare different costs and services.
You can find specialist wealth managers in your area by selecting that option in the Unbiased search.