Have you checked your Wealth Manager's EQ?

People often get confused between investment manager and Wealth Manager. Here's an attempt to assist you in understanding the difference

Updated: Feb 20, 2017 03:41:07 PM UTC
A Wealth manager is a companion of the client who should be as trustworthy as their closest family (Image: Shutterstock.com - for illustrative purposes only)

Before currency came into existence, life was simple, there were some rulers and there were many who were ruled. Barter system existed. You gave something and in return you took something.

Then currency came and with its arrival, came the financial, legal, taxation, retirement, professional and many other woes. To alleviate resultant worries and troubles, and assist individuals achieve their financial goals, came into existence the Wealth Manager.

Most of us like to plan for the future. Thus every human who plans for unforeseen circumstances and unplanned exigencies, has savings and thus investments and finally assets. This wealth which he creates overtime needs preservation, needs growth, needs management and hence a wealth manager is essentially required to look after it.

People often get confused between investment manager and Wealth Manager.

In this article, I make an attempt to assist you in understanding the difference.

Investment manager simply is an individual or a firm which advises and manages investments across asset classes for its clients or on behalf of its clients. However the role of a Wealth Manager is much larger, wider, broader and deeper.

Wealth manager’s role extends to aiding in all aspects of an individual’s life, actions and decisions – business & personal due to which wealth in all forms and across all asset classes can increase or decrease. It starts from financial matters and ends with helping the client to pass on the wealth to the next generation. It involves making sure client’s wishes and mandate post his/her death is executed by the trustees in accordance with the instructions/directions.

If the client is going through legal challenges on the business or personal front, it’s the role of Wealth manager to hunt for the best legal team or attorneys who can represent the client and protect his interest.  A client who wishes to create trusts to plan taxes or to protect interests of near and dear ones, is assisted by the Wealth manager by getting right set of trustees and tax accountants. It’s one amongst many functions of Wealth manager to monitor client portfolios across asset classes, geographies, currencies and ensuring that the client sticks to the asset allocation and achieves the goals of retirement planning, philanthropy, children’s higher education etc.

Some of these engagements between a client and their Wealth Manager are a testimony to the trust and faith that can develop with an engaged advisor.  The below examples will give some insight into the complexity of issues that a wealth manager may be called upon to handle.

a. An elderly client, who stays in an upmarket suburban property in Mumbai, was faced with an emotionally wringing choice.  Few years back, the client’s only son and daughter in law tried to make her seem senile and evict her from her own house, pushing her to old age facility for the mentally challenged. She confided in me. We took the advice and help of two leading lawyers, and were able to move the son and daughter in law out of house, finding alternate living arrangement for them. b. Another elderly widower client had a substantial real estate asset in a prime location and a large amount of financial assets. His children had irreconcilable differences about the future of these assets. The client wanted them to get almost equal shares, with no legal dispute, with the daughter being given a slightly larger part. The children, however, couldn’t agree amongst themselves and had concerns with the plan. We mediated and assisted the client in bringing the inheritors on the same page, thereby divided the assets amicably amongst them. Now the client has passed away, but some of the siblings are still being advised by us.

In a nutshell, a Wealth manager is a companion of the client who should be as trustworthy as their closest family, who can see and advise things objectively without getting influenced by biases which the client may have.  A Wealth Manager allows the client to focus on their Prime Life Goals with all ancillary goals becoming goals of the Wealth Manager to plan and achieve for them.

We have talked a lot about the role of Wealth Manager, but before we progress further, it’s pertinent to decipher what is EQ or Emotional Quotient.

Dictionary defines EQ as, “The ability to understand your own personal feelings and those of other people, and to consider other people’s feelings when making decisions.”

Thus a wealth manager with High EQ needs two specific qualities
1. Empathy
2. Patience

But why are these needed and more importantly how would one know that their wealth manager has these qualities.

Addressing Why first?

Most clients like most individuals are driven by two common emotions- greed and fear. In an affirmative scenario, client becomes overzealous and is driven by enthusiasm to make more money, acquire more power and quickly encash short term gains. When the world turns around, bad news grips the client with anxiety, fear and worry, allowing distress to take over the driver’s seat.

In both the scenarios, it’s the Wealth manager who should empathize with the client and understand the dynamics of the situation, client’s position, external environment and make the moves for the client without getting unduly influenced by emotions. For getting the right perspective from the client, it’s ponderous that the Wealth Manager builds the emotional connect with the client and still remains disconnected with their view and thought process. It sounds contradictory, but it’s paramount that the wealth manager looks at events from client’s eyes but views them as an outsider. For the Wealth Manager, their single focus is overall well-being of the client and attainment of the preset goals.

Shifting gears and racing towards the how part. How would one their Wealth Manager’s EQ?

Your answers to the below questions, will guide you.
1. Is your Wealth manager a patient listener?
2. Doesn’t interject and push their perspective?
3. Does he/she bring both positive and negative aspects of any situation?
4. Do you think he/she has an exceptional value system?
5. Does he/she narrate both sides of the story?
6. Does your wealth manager appear to you as self-assuring?
7. Does your wealth manager talk about both optimistic and pessimistic scenarios, and outlook?
8. Does he/she offer to make minimalistic changes in your portfolio?
9. Does he/she inspire you to get things done?
10. Does your wealth manager push to talk more about the problems which worries you?
11. Doesn’t act in haste?
12. Does he/she requests you take time and mull over decision before taking final action?
13. Is your wealth manager transparent about the costs and charges associated with each product and service?

And finally the most important one

Do you have implicit Trust and Faith in Your Wealth manager?

A ‘yes’ to most of these questions would mean that you can leave your hard earned wealth and future goals in the Pilot’s hands, and  sit back and enjoy the flight.

By Siddhartha Rastogi, Director, Private Wealth, Ambit Capital.
(The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official view or position of any Ambit group entity.)

The thoughts and opinions shared here are of the author.

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