High Net-Worth Advisor Selection Process

The High Net Worth Advisor Selection Process

Tracy O. Crane Intelligence Analyst
Tracy O. Crane, Certified Protection Professional

How do you as a high net worth individual select your advisors? Sadly, personal recommendations can carry little weight due to the fact that each individual has their own unique circumstances and needs. Deciding between large firm advisors and small firm advisors is another factor that should be heavily discounted by high net worth individuals because either carries with it its downsides and upsides.

As I work with high net worth clients I often find that bad choices have been made. Frankly, some clients just made a wrong choice for an advisor; most often due to taking the advice of a friend or by making an emotion-driven choice.

Maybe the following quick overview discussion can help.

Make Sure Its Legal

One of the most difficult but extremely important factors is insuring that your advisor is not knowingly or unknowingly participating in money laundering schemes or political processes. Just as with any individual, large and small professional investment firms can be deceived–especially by the growing global network of crime.

Avoid Advisors That Have No Outside Measures

All firms,small firms and large firms and independent advisors as well, may measure their own performance. calculated returns should be published by an independent, and unassociated, third-party. Industry best practices dictate measurement of performance and publishing of the measurements is independent of the firm or advisor.

Ask The Basic Questions

After, and only after you have chosen your investment advisor, you will want to question all aspects of the proposed investment. If the advisor has any hesitation with answers, that is an indication that the advisor does not have full knowledge of the proposal. The advisor should readily be able to explain how accessible is the investment. How long would it take to recover the investment? In other words, what is the liquidity? What is the turnover and how will it affect capital gains taxes and/or tax deferral?

Don’t Believe Everything You Read… or Hear

Facts, figures, tables and spreadsheets can have errors. People are the creators of these materials and errors can and do happen. When narrowing down any investment a good old-fashioned pencil and paper can really open your eyes, or – set down with the advisor and recreate the spreadsheet while questioning every entry on every document.

In Closing

You need to ask all the questions you feel are necessary. And, if it comes to mind, it is necessary. Invest time to build a trusting relationship with any advisor.


Tracy O. Crane