Is Your Wealth Manager Competent?

Last Updated Aug 7, 2009 8:36 AM EDT

PricewaterhouseCoopers recently released their 2009 global wealth management survey and it includes some surprising findings. First, many wealth managers don't think they have the skills to handle today's complex markets and most wealth management firms aren't doing much about it. If you're working with a wealth manager and aren't happy with how things are going, you might want to check out the survey and then ask some questions.

Low Quality. What I found most interesting about the survey was contained in section four where wealth managers themselves identified their concerns over their lack of training and experience with handling complex financial transactions. Moreover, only 20 percent of CEOs felt their wealth managers were of high caliber. This should be a wake-up call to clients and the industry.

Lack of Training. Here are some of the areas in which wealth managers felt they could use more training:

  • Lack of client relationship skills
  • Poor understanding of risk
  • Weak tax planning skills
  • Lack of product knowledge
This is unfortunate given that the bulk of a wealth manager's job is to develop meaningful relationships with clients, manage risk, evaluate investment products and help with tax planning. I'll give the wealth managers themselves credit because according to the survey, they're asking for more training and experience, but their employers don't seem very interested in providing it.

Sales. The main problem is that much of the wealth management business is focused around sales, meaning bringing in new clients. Not enough time or money is allocated to actually helping wealth managers learn how to manage wealth. You have to blame most of this problem on the compensation structures of these organizations. If the compensation system rewards sales much more than advice, then that is where employees will focus their efforts.

Priorities. But those who set the course for these firms don't seem terribly concerned about the quality of the wealth management advice their organizations are dispensing. Acquisition and retention of their most talented wealth managers was only seventh on their list of priorities. Since the quality of the advisor is usually first on the client's list of things they want, I would say we have a pretty big mismatch of business objectives.

Bottom line. If you're working with a wealth manager and you're concerned about how things have been handled, read this study. Then plan on having a serious conversation with your wealth manager to determine if he or she is capable of providing prudent advice or just interested in making more sales.