How Do Intelligent Investors Hire Wealth Managers?

Since publishing our Huffington blog which mentioned only a small fraction of what occurred at banks and Wall Street firms last year, not much has changed.

Why do perpetrators of financial crimes choose to commit them?

Perhaps it is wiser to pose this question: how does a consumer know s/he has engaged a wealth management adviser who will act professionally, ethically, and in the client’s best interests 100% of the time? As fiduciaries, The Abernathy Group II Family Office is legally obligated to serve our clients’ needs first. We have done so since we were founded. Fiduciary responsibility is the cornerstone of our business model—and it is the law. If you want to assure your wealth is being managed by a fiduciary, ask your wealth manager to sign an oath. If s/he refuses, s/he may not be serving your interests 100% of the time.

How can investors demand something better?

New York Times financial columnist Tara Siegel Bernard wrote: Before the Advice Check out the Adviser, and shared the story of one senior couple. “Like many consumers, they say they didn’t realize that their broker wasn’t required to follow the most stringent requirement for financial professionals, known as the fiduciary standard. It amounts to this: providing advice that is always 100 percent in the consumer’s interest.” Investors want to hire experienced money managers. However, while the National Association of Personal Financial Advisors counts over 1 million financial representatives, only a fraction of them are registered fiduciaries.

What perpetuates the system?

“On the one side, the banks, brokerages and insurance companies want such yet-to-be-defined rules to let them keep receiving commissions for selling investment products. In the dual-standard system now in place, their brokers only are required to make sure what they sell is suitable for clients,” writes Corrie Driebusch in the Wall Street Journal. Billions spent on global advertising have made brands and institutions familiar—they’re presented as established, well-run companies worthy of our trust. And investors often give it to them. If there was an alternative, large institutions would stand to lose trillions of dollars. Nearly $46 trillion is privately managed, according to Bloomberg News, so clearly not everyone is using their local neighborhood stockbroker. Speaking of which, when was the last time your stockbroker spoke to your accountant, lawyer, or business manager to discuss your overall wealth and risk profile?

If you answered “never,” you’re far from alone—this behavior is common, even among the affluent (yet uninformed). But this lack of coordination could be costly.

Who is a qualified wealth manager?

Qualifications, titles, and designations for financial advisers and wealth managers vary greatly. The Bureau of Labor Statistics projected that by 2022, the number of Personal Financial Advisers will increase by at least 22%, a growth rate much faster than average. They also reported the 2013 median income was $75,320 annually for a “personal financial adviser” and $71,720 per year for Securities, Commodities, and Financial Services Sales Agents. If you want to know how to “screen” a financial adviser, here are the questions we recommended to investors on

“While you cannot put a price on investor protection, you can gauge the price paid by investors from the losses they suffer under the current system.”— William Galvin, Massachusetts Secretary of the Commonwealth