At What Point Should You Turn Your Investment Portfolio Over To A Professional?

22 September 2015
 Categories: , Blog


With the exception of those who inherit a sum of money or win the lottery at a young age, most investors start small, putting aside a portion of each paycheck and increasing this amount over time and with pay increases. When you're just starting out, you may not feel the amount of your investment portfolio justifies the services of a professional wealth manager or investment adviser. However, at some point, your do-it-yourself approach to investing may begin to cost you -- you could find yourself making tax blunders or investing your funds at precisely the wrong time, diminishing your investment returns over time. How do you know when you should relinquish control over your investments and engage the services of a professional?

What is the difference between a wealth manager and an investment adviser?

While these terms are sometimes used interchangeably, there are several key differences between these two professions. Depending upon your financial situation, you may need a wealth manager, an investment adviser, or both.

An investment adviser focuses primarily on directing the funds currently in your retirement accounts, as well as investigating other potential investments and making recommendations that complement your appetite for risk. While your investment adviser may offer some tax information, his or her ability to do so is fairly limited, and you may find yourself seeking more detailed tax advice from an accountant.

A wealth manager helps direct your entire net worth portfolio, rather than merely your retirement or taxable investments. This individual will evaluate all of your circumstances.  For example, your investment adviser may be able to help you choose a fund that will earn sufficient returns to help fund your retirement, but your wealth manager will be able to take into account your tax status, the age at which you plan to retire, and even any genetic or pre-existing health conditions that could impact the amount of time you'll be able to work before retirement. Wealth managers can also help you structure your assets to better provide for your children or other family members in the case of your unexpected death. 

When should you seek the services of a wealth manager? 

Although there isn't any specific threshold of assets that trigger the need for a wealth manager, if you have any potential financial complications or special considerations -- like a blended family, a likely early retirement due to disability, or a complex tax situation -- you may benefit from seeking the advice of someone who can take a holistic view of your financial and personal life. Your wealth manager may be able to structure your retirement contributions to save you money on taxes or help you determine which investments you should draw down first upon retirement. 

Above all, you should trust your gut. If you no longer feel comfortable handling your own investments, or if you're nearing retirement and are afraid of making a major blunder, it's likely that the price you pay for private wealth managements services will be well worth the peace of mind of knowing your savings are safe.