Five wealth management myths debunked
The world of wealth management has often been shrouded in mystery – radiating an aura of exclusivity where the levels of transparency don’t quite match the premiums charged for managing your money.
Modern wealth managers like Netwealth challenge this status quo. We offer clients a more transparent and efficient professional service, without neglecting the high levels of personal attention that clients may prefer.
Yet based on what has existed before, it’s not surprising that many myths persist. It’s therefore worth exploring – and debunking – some of the most common fictions that investors face.
1. You have to be wealthy…
While clients typically need to have a certain level of capital – either in savings, an ISA, or a pension – you don’t have to be wealthy to have your money professionally managed. Clients can join Netwealth with a minimum of £50,000 to invest.
Family members and friends of clients can also have independently managed portfolios with much less – just £5,000 – if they become part of a Netwealth Network, the only one of its kind in the UK.
2. …and pay handsomely to get a good service
A premium service shouldn’t have to come at a premium cost. While traditional wealth managers have previously sought to justify high charges by referring to past performance, we believe that low fees should consistently underpin an investment service.
Lower fees can have a remarkable impact on investments over the long term. A fee difference of 1%, which is the typical difference in fees we see between us and our traditional competitors, on a £500,000 portfolio could mean £80,000 more for an investor in 10 years and nearly £240,000 over 20 years (based on our medium risk level portfolio).
3. You should be prepared to act when markets are unstable
The role of a wealth manager is to invest your money for you. While it is often useful to keep appraised of what is happening in stock and bond markets, you generally shouldn’t need to do anything.
In fact, history shows that it pays to ride out the typical peaks and troughs investors experience and stay invested for the longer term – even when markets are volatile and uncertain – to ensure you capture more of the gains when markets rebound.
As a team of experienced investors, we help you to navigate the behavioural pitfalls that can meaningfully impact your long-term objectives and performance goals.
4. You can’t clearly see how your investments are performing
While investors traditionally may not have had clarity around where their funds are invested – and merely get one update a year – this is changing. Investors these days demand much more visibility.
According to research we conducted with YouGov, fee transparency was the number one factor that mattered when choosing a wealth manager – with 72% of respondents ranking this as most important to them.
We ensure that investors can not only see more about their investments, but also do more with these modern planning tools. They let you model for various scenarios – such as tax rates, risk level, contributions and withdrawals – to create a useful impression of how your finances could unfold and plan ahead with more confidence.
5. You have little control over the risks of investing
All investing comes with some level of risk, including the risk of ignoring even relatively benign inflation over the long term. This is why we encourage people to be conscious of the factors that they can control when investing.
While there are several factors you can’t control (such as market performance and your lifespan, as well as inflation) you may be surprised by how much influence you do have over your investment outcomes – and how much of a difference you can make to your future.
Choose a wealth manager with a difference
While the myths above persist, they may prevent investors from seeking a better home for their money.
This is why we set up Netwealth: to overcome the traditional misconceptions about how money is managed and make a meaningful difference to those who want to prepare for their future.
The investment road is often hindered with bumps along the way – why not make the journey smoother?
Please note, the value of your investments can go down as well as up.