Do I Need a Wealth Manager? Questions for Your Consultant

If you ask ten of your friends or loved ones what it means to be financially healthy, you’ll probably get ten very different answers. We tend to develop our ideas and perceptions about finances from a multitude of influences; these can include everything from the ways our own parents managed money to how wealth is construed in popular culture. All of this can add up to some confusion about what might be the best way to manage your particular financial situation. You might even be afraid to ask questions you think are too basic or that you “should” already know the answers to.

The thing is, wealth management isn’t something we were taught in school, and the answers to important questions aren’t always intuitive. So, we’ve put together answers to some of the most common questions about wealth management, retirement, and investment strategies to get you started on the path to more confidently managing your finances.

Do You Need a Wealth Manager, and When?

If you are asking yourself this question, that’s the first major indicator that it may be time to talk to a wealth manager, because it means you are serious about your money. It’s never too early to start thinking about your long-term financial goals, and having professional guidance can help you feel more confident and secure about your decisions. It can be tempting to take the advice of friends and family when it comes to money matters. But, having an experienced, trained wealth manager who knows the ins and outs of planning long-term for your future can help ensure that you take the path that makes the most sense for your individual situation, and that you aren’t acting on impulses or emotions that could lead you into trouble later down the line.

Do All of My Checking and Savings Accounts Need to Be at the Same Bank?

No. In fact, the generally accepted rule is to not have all your assets with just one financial institution. Chances are slim that a bank could go under, but also remember to consider other factors, such as reputation, overall fees, and incentives your bank might offer from which you can benefit. For example, some banks offer fee waivers and discounts when you open multiple accounts with them. Also, remember that the FDIC (Federal Deposit Insurance Corporation) provides protection up to $250,000 per deposit account. The coverage for jointly-held accounts is doubled.

This FDIC protection covers:

• Checking accounts
• Savings accounts
• Money Market Deposit Accounts (MMDAs)
• Certificates of deposit (CDs)
• Cashier’s checks, money orders, and other official items issued by a bank

The government also makes total limit exceptions when deposits fall under other account and legal categories. A wealth manager can also help you decide what makes the most sense on how to structure your accounts.

I’m Just Beginning My Retirement Account. How Much of My Paycheck Should I Contribute?

Always contribute at least the amount of your employer match contribution, which generally will fall between 3% and 10%. Even if makes your check a bit smaller, don’t hesitate to get creative on how you can live on a little less—for example, sacrificing a few meals out a month to bolster your retirement is worth it. Remember, your employer is helping you to double the money going into your retirement, pre-tax, and free of charge. If you can stash away more, definitely do that. But, always take any opportunity to grow your retirement savings.

Should I Invest More in High-Risk Funds or Play it Safe?

Going with more aggressive or conservative investments mostly has to do with the age at which you are investing. If you are in your 20s and investing, allocate a higher percentage of your investment capital into funds which carry a higher risk but will also reward you with higher returns. Be prepared for the volatility, however, and (barring unusual circumstances) don’t be tempted to withdraw from a fund the first time it experiences a loss of capital.

What About Investment Strategy if I’m Over 40?

If you are just beginning to invest around middle age, it makes much more sense to stick with the more conservative and balanced funds. A great wealth manager will always be eager to have conversations with you around risk tolerance before making any new investment recommendations.

I Have Retirement Accounts From More than One Employer. Should I Combine Them?

Not necessarily. If you are happy with your returns on investment (ROI) on a retirement plan established with another employer, leave them there. Don’t ever feel pressured by any adviser to liquidate assets or change brokers right away for an upfront fee. That is a red flag. A good wealth manager will be interested in the success of your investments over the long-term and offer you an honest assessment of products based on your risk tolerance and projected retirement date. They should be happy to guide you through understanding fund pro-forma, portfolio descriptions, and manager fees.

Do I Need a Wealth Manager to Establish a Trust?

Absolutely. Establishing a trust can be one of the wisest financial decisions that you make, but it can also be complicated, and professional guidance from someone who knows all the complexities is essential. ERISA (Employee Retirement Income Security Act) laws determine when a fiduciary trust has been established. This offers a layer of guidance for your wealth advisor as well as legal protections for you.

How Much Does it Cost to Have a Wealth Manager?

This will depend on the fee structure of the wealth manager you work with. “Fee-only” models take the form of a flat fee, hourly rate, or a percentage of assets under management. “Fee-based” models operate similarly, but advisors can also earn commissions from certain financial products offered by the institution they represent. A trustworthy financial planner will be transparent about their fees and responsive to any questions you may have.

How to Find Wealth Managers you Can Trust

SD Mayer isn’t a bank or finance company, it is a team of registered investment advisors who value a holistic approach to wealth management. We are knowledgeable about a wide range of investment products and experienced in advising people at all stages of life. The questions above are just the beginning—we know you have more and we have the answers.

If you’re ready, you can share more with us than just how much you want to have saved for retirement in 10 years. We want to know about your life goals and work with you on how to pull it all together. Do you need a wealth manager? An associate at SD Mayer is available today to have a frank conversation about just that, and help you decide which of our services best fits your needs. Contact us today to learn more.

Image Credit | Olivier Le Moal | Shutterstock