Three schools of thought on wealth management!

Slowdown has made people aware of the fact that money can be as easily lost as it is made during boom time. This has made advisors to develop new ways of presenting their services.

As portfolios tick up after the vast losses of two years ago, many investors remain wary. The latest whiz-bang product is more likely to inspire skepticism than desire. The emergence of different approaches also shows the resilience of the wealth-management industry – this is not the first time the industry has changed how it describes itself. Understanding the differences among the three approaches and choosing the right advisor may, at least, help investors sleep better at night.

The caring approach: Advisors in this camp say they manage money as if it were their own. They go beyond the issue of fiduciary responsibility of registered investment advisors, they say.

The technical approach: Advisors in this category say it is a way to talk about returns and expectations without dwelling on the numbers themselves. Doing that requires them to ask different questions. The other distinctive element of the technical approach is an emphasis on lower costs and fees, which translates to a higher return.

The retirement-focused approach: This approach educates clients about their portfolios and tries to persuade them to keep the long term in mind. By extension, this means trying to ignore the short-term peaks and valleys in their portfolios.It’s essential to remember that the three thought schools are not broken down by wealth levels but by personality traits. Most important in choosing an advisor is for people to ask: What kind of investor am I?


Source : ET