At a basic level it seems like:
- Wealth manager: Wealth management brings together tax planning, wealth protection, estate planning, succession planning, and family governance. Wealth management can be provided by large corporate entities, independent financial advisers or multi-licensed portfolio managers who design services to focus on high-net-worth clients.
- Finacial advisor: A professional who provides financial services to clients based on their financial situation. In many countries, financial advisors must complete specific training and be registered with a regulatory body in order to provide advice.
... yeah so I still don't understand the difference, but I've been watching some interesting videos are here are my notes on the actual half-decent videos:
Types of Financial Advisor
Video: What is a Financial Advisor?.
- Stockbroker - buy and sell stocks on behalf of client, usually for a fee/commission.
- Financial Planner - advise on estate planning, retirement planning, insurance needs, personal finance.
- Certified Financial Planner (CFP) - held to strict ethical (Fiduciary Duty) & performance standards, required to have experienced and pass a board exam.
- Chartered Financial Consultant (ChFC) - similar to CFP.
- Investment Advisor - build investment portfolio based on goals, timeline & risk tolerance. Help build manage & transfer wealth.
- Registered Investment Advisor (RIA) - registered with state regular, focus on investment advice around stocks, bonds, mutual funds, and other securities.
Questions to ask a Financial Advisor Before Signing
- (1) How are you paid?
- If you get pushback ask: How much money will come out of my pocket every year?
- Is it commission based (commissions from insurance policies), asset under management (% of AUM quarterly), planning fee (maybe $1000 a year) or a flat fee (cheapest in long run)?
- Is there a load charged up front?
- (2) Are you obligated to put my needs first?
- In other words: are they held to a fiduciary standard? (CFP)
- If so, what are their ongoing fees?
- (3) What are my ALL-IN costs?
- Will you leverage their advice for a short time or long time? Maybe you want to take on more responsibility down the line.
- (4) What is the scope of the services provided?
- What will be the nature of communication? What are the terms of the engagement?
- Some might include a financial plan for kids and retirement, some might include tax documents (CPA) others are just about managing stock.
- (5) What are our qualifications?
- Formal: College, licenses, CFP (credibility, but hard to get).
- Informal: How are they doing financially? References?
- (6) Why are you a financial advisor?
- What motivates them?
- (7) How will our relationship work?
- Will you bounce ideas back and forward, will you just receive information? How often communication.
- Quote: "all conflict is a result of expectations not being met"
- (8) How often will we communicate?
- Also: How will you communicate (text/in-person/formal/phone/etc)?
- Also: When are they expecting you to take action.
- (9) Why did your last two clients leave you?
- After a little rapport built, see if they answer honestly.
- (10) What happens if/when we stop working together?
- How will advisor feel if you don't act on all their recommendations.
Formulate a Request
I haven't got a financial advisor *yet* honestly! But I found a nice recommended set of finacial advisors on an internal Google recommendation sheet, and I figure I'll reach out to them with this:
I'm a software engineer at Google and I've never had a financial advisor, but you were recommended by XXX in an internal google spreadsheet. I'd love to chat about what options are available, and below I have a quick summary of my finances.
Dr Andrew Noske.
My financial state:
- X year old software engineer at Google earning base $X a year.
- Single, no kids and renting alone in the Mission District, San Francisco.
- Own no property.
- Have ~$XM total in U.S. assets, with about:
- Bank of America: $Xk (earning little interest)
- Charles Schwab : $Xk vested Google shares (probably should to diversify) + $X unvested Google shares (golden handcuff) + $Xk S&P500.
My financial goals:
- Buy my first property within a year... maybe a 2 bedroom in SF and live in it for at least 5 years and not lose on a crash.
- Longest term: Save enough to quit Google early, and work more on passion projects.
- The dream: More passive income streams + still able to do vacations and visit my family in Australia more often.
- Also: Undecided on children, but maybe have enough to afford 1-2 children one day, although Australia would be cheaper for that.