CEO Interview: Finding Your Best Wealth Advisor

Personal Finance

CEO Interview: Finding Your Best Wealth Advisor

If you are a client of a private bank, or thinking of becoming one, there are some key questions you need to consider before deciding on the best advisor, says the Chief Executive Officer of Crossinvest, Rohit Bhuta.

Published on 22 September 2016

Looking to invest your money so you can grow or preserve your wealth? Keep your preferences and priorities in mind when it comes to selecting your best wealth advisor. A strong, recognisable brand name alone should no longer be the premise on which you select your wealth advisor.

The complexities of the new normal and market and regulatory challenges have rendered an equal playing field – one where a smaller brand is perhaps providing the same proposition, and sometimes maybe, a better one than the more known and recognisable brands in the wealth advisory space.

We speak with Rohit Bhuta, the Chief Executive Officer (CEO) of one of Singapore’s pre-eminent independent wealth managers (IWM) Crossinvest on the key considerations when searching for the best wealth advisor to help you grow and protect your wealth.

Rohit Bhuta, CEO at Crossinvest

Are we spoilt for choice for wealth advisors in Asia?

At first glance, it appears that we are. Unfortunately though, while we are spoilt for choice, good quality advice is few and far between. This seeming abundance can be very confusing for someone trying to find the most appropriate private wealth advisor. We are inundated with buzz-words like wealth management, private banking, private wealth advice, financial planning and similar, words all used rather loosely.

In fact, we can generally divide the wealth advisory industry into two core categories:

  • Execution and transaction only businesses: these are private wealth “advisory” businesses that “sell” investment products (sometimes their own investment products) to their clients. The wealth advisor under this scenario is typically evaluated on the total revenue or investment product sales he or she generates for the organisation. Under this scenario, the wealth advisor is working for the organisation.
  • Advisory-led businesses: these are independent businesses that offer you a tailor-made, independent, best-of-breed portfolio-based investment solutions’ over a time horizon to best suit your investment objectives and risk appetite. The wealth advisor from such firms will not have a revenue or product target, and is primarily working for you (client). Most IWMs, like Crossinvest, for example, are advisory-led businesses.
CrossInvest Finding Your Best Wealth Advisor Offices Wealth

So how should you choose?

Each category caters to a different investor need, and it is important to understand which proposition would serve your underlying investment objectives best before you embark on selecting the wealth advisor that you are comfortable with.

The decision, however, must not be based on whether you have to pay an advisory fee. In the end, irrespective of which proposition you choose, you will be paying a fee. The only difference is that you know how much fees you are paying under the advisory-led model. The fees that you pay in the transaction-led model are usually wrapped within the transaction charges, and/or a higher fee is charged at the product entry level, by the product manufacturer, in order to pay the advisor a commission for the “sale”.

Platforms like WEALTH go a long way towards helping you filter through the list of wealth advisory providers to come up with a shortlist that will best suit your investment needs.

Catering to changing needs

There is a clear and present need for both models as each caters to different preferences. For example, if you are satisfied with being “sold” investment products from time to time, and trade on ideas generated each day, or if you are satisfied with being sold the merits of leverage or investing in insurance-linked products, and have multiple advisors providing you access to investment ideas, then the execution and transaction only model would suit best. The amount of fees you pay (and therefore the corresponding revenue for the wealth advisor) depends on the number of investment transactions you execute.

On the other hand, if you prefer an advisory relationship, where your independent advisor understands your investment objectives, risk appetite and has a complete line of sight of your underlying wealth (allowing the advisor to design, manage and monitor a diversified investment portfolio), then the advisory-led model is the most appropriate fit. There is typically an advisory fee attached to this service (similar to what you would likely pay your accountant or tax advisor). The level of fee is linked to the total assets being managed by the advisor.

Currently, there are an increasing number of clients in Asia who are recognising the need for a robust, holistic and independent investment advice. Asian investors are now more likely than ever to seek out an independent wealth manager, like Crossinvest, to cater to their investment requirements.

How this impacts you

If you are looking for a wealth advisor, you need to clearly understand your investment needs first. Only then can you ask the right questions when reviewing your options, in order to find out which wealth advisor can offer you the best value preposition. Whether you are paying an advisory or transaction fee should not be a factor in your decision-making process. In the end, you will have to pay fees anyway.