Say It Like It Is – Letter To Clients In Search Of A Wealth Advisor

Say It Like It Is – Letter To Clients In Search Of A Wealth Advisor
Christopher F. Poch

If you have decided to seek a new wealth advisor, permit me to offer a process to go about it.

Know What to Look For

  1. Don’t just ask friends. Their opinions reflect their preferences and experience. If you do ask friends, find out why they made their selection and how it compared to other options. If their process was not highly researched, disregard.
  2. Write it down. Start by writing down the services and investment advice you need and what you want your relationship to be like. Adopt the mindset that you want to get the most value out of your advisor, not to pay the least.
  3. Select your advisors, then your investments. Invest the time and attention to this part of the process and do it well. Your team of tax, trust, and legal professionals will have a significant impact on the ultimate size of your estate.
  4. Determine your wealth-advisory needs. Do you require financial planning, estate planning, and trust services? Will you need insurance, philanthropic and tax planning advisory? Ascertain if the firms you are considering have extensive departments or just a few people. Are the services comprehensive or are they glorified questionnaires to get to a sale?
  5. Investment Products. Do you want to make investments, buy insurance, get home loans and credit cards all at the same place? Or, do you prefer providers with focused expertise? Do you want money managers unaffiliated with your advisor, or the customization of “in-house” investment strategies overseen by your own portfolio manager?
  6. Client experience. You have had great client experiences. Write down your expectations for your wealth advisor. Ask how quickly they return calls and emails, especially over the weekend. If the client experience is driven by an individual’s promises, things can change. If it is driven by systems and a firm-wide attention to detail, you are in the right spot. 

Business Models

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The business model of the firm you select will influence your experience. All business models have benefits and limitations. The key to deliver a great experience will rest largely in the hands of the specific team you select.

Common business models:

  1. Large banks. Firms with a broad array of products may be preferred for those who prize choice and convenience. Staff tends to be less experienced and the loading of clients per person tends to be higher.
  2. Brokerage firms. The client experience is almost entirely dependent upon the team of professionals serving the relationship. The model skews heavily toward investments. Planning services for estate, tax, and trust are usually secondary, often disconnected.
  3. Trust companies. These legal entities are almost always attached to a bank or asset management firm. The better ones have extensive internal trust, tax, and planning expertise. Investment results can vary widely.
  4. Asset Managers. These firms sell their own money-management services. Assess whether the included wealth-management services offer adequate breadth and expertise.
  5. Registered Investment Advisors. Independent companies that most often affiliate with one or more large custodians for products and support. The segregated operational aspect adds a level of administrative complexity.
  6. Ultra High Net Worth units. Some firms have dedicated units to serve ultra high net worth families. The units tend to have fewer clients and are staffed by more sophisticated, better-trained professionals.
  7. Local advisory team. In large measure, your experience rests in the hands of the team you select or is assigned to you. Assess whether the team members have sufficient expertise and systems to ensure a superior experience. Ask:
  8. Which services are provided, how frequently and by whom, and who initiates?
  9. Who receives the call on weekends and when can you expect that call to be returned?
  10. Request tangible samples of work product that meets the complexity of your needs.
  11. Intangible services. Who will educate me, help me grow and learn, and be smarter about money, investing, taxes, budgeting, philanthropy, and family governance? Real pros will have answers to these questions and examples ready.
  12. Compensation drives behavior. Know how the advisory team gets paid. Does the team compensation vary based upon asset mix or product? Alternative investments, structured notes, and insurance are usually not included in these fees. If multiple fees can be layered, be leery. When your economic interest diverges from your advisor, the recommendations usually follow the economic interest of the advisor.
  13. Low fees are great but avoid the bait and switch. When it is all said and done, high quality wealth management firms will charge between .75% – 1.5% on assets under management in most relationships.[i][ii] If the fee is lower, ask where and how the firm is making up the difference – because they are. High fees reduce your net worth, so avoid them. However, a rock bottom fee sentences you to inexperienced staff and call center quality service. Ask yourself, “Is this really what I want?”
  14. Minimum relationship size. Minimums indicate familiarity of relevant issues, professional training, and service. The higher the minimum the more the attention you are likely to receive.
  15. Interview candidates. Contact the office manager and describe what you are seeking. Be clear that you don’t want the person who is next up on the “lead call-in list” nor the highest revenue producer. Meet with the manager and the lead advisor of the team. A room filled with six team members shows depth, but also could imply a bunch of product specialists motivated to get the most out of you.
  16. Take notes and record what you heard. Write it down. It’s challenging to recall all the nuances and details that you learn during these meetings.

The One Essential Step No One Does

  1. After your meetings. Compose a summary of your notes and email it to the advisor and the manager. Ask for clarification on points where you are unsure if you understood what they meant. This one step can be the difference between a good experience and disappointment.

If the response from the advisor is clear and direct – good. If the response is ambiguous, buried in attachments, or references legalistic language, beware. Regulations limit what can be written, but most service questions can be answered directly.

List What You Know About Investing and What You Don’t

  1. Investor behavior drives results. How you behave during turbulent markets will determine your wealth accumulation. Most buy high and sell low. In order to earn competitive results, you must educate yourself, be patient, and resist panic when markets perform poorly.
  2. Ask how your advisors keep you calm when others are not. Risk and fees are important, but don’t let the tail wag the dog. Pay your people well so you will get their best.

Understanding the Nuances

Now that you have the checklist and the process, let’s go a little deeper to explore nuances.

  1. Investment, income tax, trust and estate law, insurance. Your team of advisors should cover the array of important matters and should have enough knowledge to discuss their colleague’s recommendations. Income tax, estate tax, insurance, and investments are the core four areas.
  2. Planning is everyone’s job. Having a coordinated plan is critical. There are usually a half dozen ways to accomplish one’s goals and no one way is perfect. The real trick is to avoid strategies that are expensive to maintain or difficult to unwind. Overlapping expertise among your advisory team increases the probability of getting the right plan in place the first time.


  1. Finding the right balance. Not every client wants the “platinum” package with the attendant expenses, but no one wants an impersonal relationship with someone who dispenses advice in a vacuum. Assess how proactive your wealth management team will be and how well they will interact with your other advisors.

Compensation for Sales or Satisfaction

  1. Sales. Employees’ compensation structure gives insight into how the relationship is likely to unfold. Companies that pay employees based upon product sales or net asset increases tend to have employees that contact clients to “make them aware of investment opportunities”, a/k/a, sell them something.
  2. Satisfaction. Firms that pay employees based upon client satisfaction, and do not have quotas based upon new clients or new assets, tend to attract a different kind of employee

Investment Results

  1. Always difficult to compare. Most firms only highlight their best-performing investment strategies or funds. Strategies with poor performance are quietly shut down or eliminated. Hence, you can never compare apples to apples, and even if you could, past performance shows how that investment did in an environment that is unlikely to be similar to the one just ahead.
  2. Seeking alignment. In cases where everyone gets the same “cooking,” customization is nearly impossible. If the results were suboptimal, it simply indicates everyone suffered together.
  3. Evaluating investment proposals.

At some point you will receive a proposal complete with investment recommendations and impressive past performance. Know that the specific investments were recommended because they met your objectives and had one of the highest risk-adjusted recent performances.

  1. *Footnote on Footnotes. Take a close look at the footnotes, especially when comparisons are made to custom benchmarks with long disclosures. Custom benchmarks with long disclosures, and whose composition changes, might indicate mathematical gymnastics were necessary to achieve favorable comparisons.


  1. All-in costs. It is important to know what the “all in” costs will be and how the costs may change as the portfolio changes. Some firms entice prospects by initially recommending low cost investment products. This may be true, but beware. Some investments include the sale commission in the net price.
  2. Broker, advisor or fiduciary? Advisors operating on a commission basis can open themselves up to criticism. Advisors working under a fiduciary standard have a higher standard of duty. Ask yourself, “do I want to spend time checking the markets and keeping up with economic trends, or do I want to be served by a fiduciary required to have my best interests come first and foremost?” If there is no economic incentive to influence recommendations, you should be okay.

Number of Providers to Consider 

  1. Avoid horse races. Every company would like all of your business, but almost all will accept a partial assignment. Having more than one provider can be a good idea, but only if you are willing to invest the time to balance what you hear from the various providers and sift through the differences. Be careful not to set up a performance “horse race” between providers. In order to win the rest of your business, or to avoid losing what they have, advisors can be motivated to covertly engage in a performance race. Risk can seep into your portfolios.
  2. In my opinion…select one. Despite the limitations, I recommend selecting one high-quality firm. Give them the mandate to manage the entire relationship and enlist the tax, insurance and other advisors to be the “watch dogs”. Once a year ask all advisors for their opinion of each other. Good advisors will tell you the truth. Weak advisors should be replaced.
  3. Get accountability and avoid brown paint. To some this may sound like putting all your eggs in one basket but I don’t see it that way. To me, it is the best way to get accountability. My Dad, a lifelong hardware man, was fond of saying, “If too many people are mixing the paint, all you end up with is brown paint.”

Is this all there is?

These findings apply to most situations, but not to all. A body of knowledge has been gathered through thousands of interactions with accomplished professionals.


Mr. Poch advises private clients and family offices.

[email protected]
1850 K St. NW, Suite 900
Washington, DC 20006
w. 202-862-2861   |   m. 202-557-8801


[i] “Average Financial Advisor Fees & Costs 2017 Report” Advisory IQ,

[ii] “Average Annual Fees Charged By Advisors”, 2016 Investment News Financial Performance Study


The views expressed herein are those of the author and do not necessarily reflect the views of Morgan Stanley Wealth Management or its affiliates. All opinions are subject to change without notice. Neither the information provided nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Past performance is no guarantee of future results.

Information contained herein has been obtained from sources considered to be reliable, but we do not guarantee their accuracy or completeness.

Morgan Stanley Smith Barney LLC (“Morgan Stanley”), its affiliates and Morgan Stanley Financial Advisors or Private Wealth Advisors do not provide tax or legal advice.  Clients should consult their tax advisor for matters involving taxation and tax planning and their attorney for matters involving trust and estate planning and other legal matters.

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