Financial/wealth advisers can be an integral part of an investor’s life, providing numerous services and tailored advice to achieve an aspirational goal. Clients can use a range of models to engage an adviser all of which can produce very different outcomes. To find “value for money” depends greatly on what the client needs.
Four Service Categories
Without doubt, the greatest source of client frustration usually comes when there is a mismatch between expectations and actual outcomes. In other words, receiving one type of service when you ‘thought’ you had engaged the adviser for another. Getting this matching process right from the beginning is integral to having a positive experience with your adviser. Take the time to do this research, it is worth it!
There are four options when seeking financial advice that will determine the most effective fee structure.
What structure do we prefer?
At Stellan Capital, we appreciate one size doesn’t fit all. Tailoring a solution to meet your unique circumstances is the only way to ensure an optimal outcome. The best fit for a client will be influenced by:
- How hands on or hands off the client is
- How outcome-driven or service-focused the client requirements are
- Total investable assets and duration requirements
- The type of assets the client holds
The hardest part, however, is putting value on the ‘intangibles’ that come with great service or advice.
How important to the client is:
- Professional expertise that saves valuable time?
- Peace of mind that you are on the right track?
- Confidence that you are doing as much as possible to meet key goals?
- Accountability that the strategy is being implemented as planned?
- Transparency that you are getting what you paid for?
Adviser Services Descriptions Table
||Professional Stock broker
||Engagement is typically bespoke but advice is generally per security where an investor is seeking expert advice per position/s within a tailored portfolio.
||Usually based on value of a specific transaction
||Execution of specific security/ies
|Funds under Care
||Professional Portfolio Manager
||Activity is typically based around ongoing services or funds management and may extend several other services which are commonly bundled into one engagement.
||Usually Fixed Dollar or Percentage-based fee calculated on either
a) amount of work involved assisting the client; or
b) the total value of the portfolio being managed
||On-going active management of a multi-asset class portfolio
|Fee for service
||Strategic Financial Planner
||Outcome based service offering usually seeking specific outcomes or strategies for a specific moment in time.
||Usually based on hours required to deliver a set outcome, strategy or formal document.
||Delivery of a Statement of Advice orWritten Strategy
||Hedge Fund Manager or Private Equity Specialist
||Service is actually based on performance driven requirements, usually measured by an agreed benchmark (hurdle rate). Agnostic of client personal circumstances.
||On-going Performance Base
||Usually depends on the outperformance over a pre-established hurdle rate, end fee (in total) to investor can be minimal or significant
||On-going active management in aspecific asset class