Mistakes People Make When Hiring a Wealth Manager

Hiring a wealth manager can be a pivotal decision in securing your financial future—but it’s also one where costly mistakes are all too common. From overlooking a manager’s fiduciary status to jumping in with the first advisor you meet, missteps in the selection process can lead to misaligned goals, poor investment strategies, and unnecessary fees. In this post, we’ll walk through some of the most common mistakes people make when hiring a wealth manager—and how to avoid them—so you can feel more confident in choosing someone who truly has your best interests at heart.

Hiring a Wealth Manager Who Is Not a Fiduciary

A fiduciary is legally obligated to act in your best interest, which helps eliminate potential conflicts of interest that could arise from commission-based recommendations.

Working with a fiduciary wealth manager may help add a layer of trust and alignment with your financial goals.

Without this fiduciary duty, a wealth manager may push financial products on you that might not align with your investment objectives or risk tolerance, and could end up costing you. 

Hiring the First Wealth Manager You Meet

While it might be convenient, selecting the first wealth manager you meet without thorough research could end up being detrimental. 

Interviewing multiple professionals may help allow you to compare expertise, services, and compatibility with your financial objectives, which could help you find a better fit. Even if you’re already working with a wealth manager, it may be worth getting a second opinion on your current financial plan. 

Choosing a Wealth Manager with the Wrong Specialty

Wealth management is not one-size-fits-all, and everyone’s situation is unique. Some wealth managers may excel in tax planning, while others might focus on legacy planning, business succession, or private market investments. Selecting a professional whose expertise aligns with your specific financial concerns may be key to getting tailored advice that addresses your unique situation.

Picking a Wealth Manager with an Incompatible Strategy

Your wealth manager’s investment philosophy should closely match your own, whether it’s conservative preservation, aggressive growth, or income generation. Misalignment may lead to undue risk exposure or overly cautious strategies that could limit potential returns.

Not Asking About Credentials

Not all wealth managers hold the same qualifications. It can be important to verify certifications that may indicate a higher level of expertise and commitment to ethical standards. Ensuring your wealth manager has relevant credentials might also help provide confidence in their ability to effectively manage your assets.

Not Understanding How They Are Paid

Fee structures may have a profound impact on your long-term wealth. Some managers may charge a flat fee, while others might take a percentage of assets under management (AUM). High-net-worth investors should probably also be wary of hidden commissions. Again, this is an area where it may be worth working with a fiduciary wealth manager, as any potential conflicts of interest must be disclosed.