Money Management - May 2007

Choosing a Private Wealth Manager:

Where to Start

by Ted Schlazer

In an economy such as the one Nevada has enjoyed for more than two decades, local individuals have accumulated large amounts of personal wealth and continue to accumulate even more. Now, Nevadans are looking to professionals to help them preserve and cultivate that wealth.

The process of selecting an individual to manage your wealth should be given careful thought and consideration. Your wealth manager will be assisting you in making decisions that not only affect you, but your family, your future generations and any philanthropic measures you wish to carry on. Therefore, it is important to know what to look for when hiring someone to manage your wealth.

A common misconception is that private wealth managers handle the same responsibilities as financial advisors. In reality, private wealth managers provide more comprehensive and highly customized services to high-net-worth individuals.

Private wealth managers do not focus solely on one aspect of the financial scope, such as mutual funds, but look at clients’ visions as a whole and create a process that takes into account the entire financial picture and how best to meet those goals. These practices may encapsulate a variety of measures including asset allocation and diversification, tax efficiency, estate planning, family offices and charitable gift-giving.

People who hire private wealth managers are generally those who have already accumulated their capital, such as successful business owners and individuals with large inheritances. The minimum requirement when hiring a wealth manager is often $1 million, because the main goal is not to make someone rich but to plan for the future.

In Nevada, only a handful of companies specialize in private wealth management. Once you are in the market for a private wealth manager, thoroughly examine and weigh all aspects of any potential manager to ensure you meet your best match – the company and/or individual who best understands your situation and is able to meet your financial goals. Here are some tips to keep in mind when hiring a private wealth manager.

Track Record

The person you choose to manage your personal wealth must possess an extensive education and employment background in this type of work. Furthermore, the company he/she works for must be specialized in private wealth management, preferably over a lengthy period of time. Make sure the private wealth manager you ultimately choose has a long and reputable track record, and can prove his/her capabilities.

Compliant with Company Philosophy

The individual who will handle your account should agree with his/her company’s overall investment performance and philosophy.

This philosophical investment outlook should also agree with your own, as you must be comfortable with and trust your manager’s abilities.

Formal Education

Not all private wealth managers have the same educational background. Some have master’s degrees in business administration and some are chartered financial analysts and/or certified public accountants.

Talk to the Decision-Maker

Be aware that the person with whom you initially speak may be a salesperson. Ask whether this individual will be making key decisions on your behalf. Before choosing a company to manage your capital, make sure you have face time with the final decision-maker for your account.

Payment Setup

A legitimate private wealth management company only earns revenue from fees, not products, and does not outsource services.

The most important thing to remember when hiring a private wealth manager is to find an individual in whose ability, integrity and clarity you can trust to keep your financial goals in focus.

Ted Schlazer
Ted Schlazer is first vice president and managing director for Mellon's Private Wealth Management group in Southern Nevada.