Author Topic: Private Wealth Management?  (Read 2860 times)


  • 5 O'Clock Shadow
  • *
  • Posts: 10
Private Wealth Management?
« on: July 23, 2017, 08:44:48 PM »
What do people think of Private Wealth Management firms/bank divisions (i.e. 1M+ in assets)?

I have an opportunity to work with a highly reputable one set up for/by a professional group up here in Canada and they are offering asset management/investing for 0.61% (0.45% after tax), the relationship is fiduciary. 

It seems a little too good to be true & it is a higher MER than Income Funds - that said, in theory, it is an actively managed portfolio vs straight index investing & they have a whole host of experience in terms of incorporations, ect & it's basically a full-service wealth management firm for high-net worth professionals, run by the professional association.

Anyone moved assets over to a Private Wealth Management firm?   Any thoughts on this?


  • Handlebar Stache
  • *****
  • Posts: 1463
Re: Private Wealth Management?
« Reply #1 on: July 23, 2017, 09:31:04 PM »
For 1 million+ in assets I don't consider 0.61% a bargain. Many advisors lower the fee for big accounts to attract business knowing they will make more even if they charge less. 0.5% on 1 million is a lot more money for the advisor than 1% on 100k. ;-)

Is the 0.61% all in? The underlying investments could have additional costs. Many firms in the US will say 1%, and then use investments that cost another 1%. Also look at transaction fees. If they are very active these can add up. IMO 0.61% for active investment management is the same as buying an active mutual fund at 0.61%, and over time the overwhelming majority of those underperform index funds. If you are paying for the active management I would consider this a waste.

What else are you getting for the 0.61%? I know you said full-service, but that normally refers to full service brokers(Edward Jones, Raymond James, etc.), and that doesn't always imply comprehensive financial planning. I'm not completely against having professional help. Some people need the hand holding. Some people with more assets need help with trusts, tax planning, estate planning... what I would consider comprehensive financial planning. If you need help with those things then get that help, it can often save you more in the long run, but find a firm that will help you with that at a reasonable fee. If you do need the additional services look for a firm that does financial planning and builds portfolios with index funds tailored to your situation. With 1 million in assets and some due diligence you might find a company that will do it for 0.5% or less, or even get a full financial plan for a set flat fee.


  • 5 O'Clock Shadow
  • *
  • Posts: 10
Re: Private Wealth Management?
« Reply #2 on: July 23, 2017, 10:13:33 PM »
Yes - that includes comprehensive financial planning and help with estates/trusts/incorporations, ect.   
Basically a bit of a concierge service for finance/banking too with a CFA - lawyer and accountant fees not included lol ;)


  • Walrus Stache
  • *******
  • Posts: 8986
Re: Private Wealth Management?
« Reply #3 on: July 24, 2017, 08:51:38 AM »
I'm in Canada and pay ~0.1% for my investment fees, which include higher MER international funds. So I'd be paying 1/6th of what you are paying each year. That's a savings of $5K/yr on $1M. I'd rather hire a lawyer or pay a financial adviser on a $/hr basis for advice when needed using my saved $5K/yr than give it to a company in the hopes I'll get value from them to cover that additional cost.

Car Jack

  • Handlebar Stache
  • *****
  • Posts: 2150
Re: Private Wealth Management?
« Reply #4 on: July 24, 2017, 12:27:33 PM »
You have to ask yourself what services can they provide that you want and are willing to pay for.

I'm worth well over $1MM  (hint...I started the "race to $3MM thread) and I work in an office complex with 3 buildings.  One of those 3 is full of wealth management companies, so if I wanted to use one, I'd stop after my noon time walk and work my way between the I8, 911 turbo cabrio, Maserati Quattroporte, gaggle of Audi S5s and the occasional Bentley into the building.  There's nothing I can think of that I'd want them to do.  Heck....if they offered to do it for free, I wouldn't let them touch my accounts.  Perhaps that's why I have as much saved as I do.

I've forever lived below my means.  Heck, I still pick up pennies when I'm out walking at lunchtime and I save aluminum for scrap value.  My wife and I both think the same way so our income has always been much higher than what we spend.  We're in all very low cost index funds and ETFs or US Savings bonds.

How I view Wealth Management companies is that they manage to turn your wealth into their wealth.
« Last Edit: July 26, 2017, 09:43:00 AM by Car Jack »


  • Handlebar Stache
  • *****
  • Posts: 1985
Re: Private Wealth Management?
« Reply #5 on: July 24, 2017, 12:40:01 PM »
I track my investment fees as an expense like any other.

So, currently, my weighted MER is 0.06%. This turns out to still > $600 for my portfolio size.... that sucks :( (I don't pay fees for each trade, so it's just the MERs).

Why does it suck? Because I don't like spending a lot and even $600/yr means i need to save $15k via the 4% rule just to pay that off perpetually.

That $600/yr is one of my larger expenses after I FIRE!

I can't imagine paying $6k... then i'd need to work longer for $150k just to cover it in FIRE... not worth it.

Note that if you actually need some of these services right now, it's way better to pay cash since then you only pay it one year instead of in perpetuity.


  • Stubble
  • **
  • Posts: 150
  • Location: Canada
Re: Private Wealth Management?
« Reply #6 on: July 24, 2017, 03:24:51 PM »
I agree with the consensus here that private wealth management is not worth the cost, and active management over the long term will trail its benchmarks by approximately the management fee and costs. That was my experience when using a managed account. My quarterly statements actually had performance reporting compared to indexes. Even when I showed the advisor that the results trailed their own benchmark he would respond with the typical end-run responses about cost vs. performance, all the value added services (much of which I get free from TDDI) and the benefits of their advisory service.

This article called The Arithmetic of Active Management by William Sharpe demonstrates why in aggregate, active management trails the market after costs:

What do you hope to get from private wealth management? A busy professional or business owner that does not have time to manage their own investments may value private wealth management services. You also get dubious bragging rights with friends about your "Financial Advisor" or "Wealth Manager".

IMO the average Joe or Jane or even the average Mr-FancyPants could get better results through DIY with portfolios like these provided they have a small amount of time to manage their investments and the discipline to stick to a plan.