Don't depend on a retail banker or insurance advisor! Look For A Wealth Manager!

Have you been approached by financial advisor/planner who trigger your emotional button like if you care for your family, then you should buy a whole slew of insurance related products (whole life, investment-linked, endowment) to have a comfortable retirement. Yes, someone is retiring comfortably, and I bet the person is most probably not you.

Have you ever walked into a bank with the personal banker selling you products (8% coupon payout- no risk! capital protected) that are on promotion with gifts? Did they even bother to find out what investments you have, your risk profile, time horizon? Have you asked them whether they are personally invested in these type of products or are they just following the sales script and promoting all the goodness of the products? Have you ever asked them do they need to meet a sales quota?

Ok, I may be generalizing here, but you get the idea.

When I first started looking for wealth management solutions, I turn to the private banks as they have always been the first choice for people to entrust their money with. From there, I begun to see the difference in the way they do wealth management. It is a process that is both systematic and holistic. I'm not saying that private wealth management is the holy grail but at least there is a system in place that will make it easier for you to build your wealth upon.

Wealth management is a long-life commitment and it is crucial that you find the right wealth management firm or partner for your wealth journey.


The figure was taken from a ML/CapGem Wealth Report and I found it quite reflective of the spectrum of wealth management service available.

As you can see at the rightmost spectrum, there is no wealth management solution presented and the advisory service is typically product-driven solution and transactional. I would classify most of the personal bankers and insurance agents in this group as they typically sells products and try to convince you that the product meets your needs. If you show interest in the products, they will give you a risk-profile form and ask you to fill in or vice versa. They will then give you the product. They are typically remunerated based on commission from the products or they have sales quota to meet, thus, they have to sell something to someone every day.

At the left end of the spectrum, you see the wealth management service is more advice-oriented and client-driven. It is commonly fee-based approach where you will pay a certain percentage (usually not more than 1%) for assets under management (AUM). But the bank will still earn any product sales charges and trailer fees it is entitled to and usually, it is a maximum of 2% and no more. Because they are already incentivize by the fee-based approach, they will be more interested in retaining your AUM and giving you good advice for your money, unlike the product-driven approach where commission is how the sale staff earns. The solution will be more holistic with the proper asset allocation and it will be based on your objective, timeframe and risk profile.

To get on the left most spectrum, you have two options:-
1) the private bank as they can spend more time with a client since the amount invested or managed is substantial enough to warrant more attention.
2) an independent wealth management firm (like the one I'm working for right now) who can offer similar wealth management solution to people who demand more from their wealth manager.