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Wealth advisors and financial advisors, both experts in managing high-net-worth individuals’ financial portfolios, are often used interchangeably. However, there is a difference between the two:
Wealth management advisory provided by wealth advisors focuses on investment-related services, helping you grow and preserve your assets. A wealth advisor works closely with high-net-worth individuals or families, offering tailored-made strategies for:
- Wealth accumulation
- Wealth enhancement
- Wealth preservation
- Wealth maintenance
- Wealth distribution
For example, if a client wishes to establish a trust fund using his/her wealth for future generations, wealth advisory provides guidance on the what’s and how’s, while considering tax matters and family dynamics.
On the other hand, financial advisory by financial advisors takes a more holistic approach, beyond just investments. That includes retirement planning, tax optimization, estate planning, insurance coverage, and children’s education funding.
It considers your entire financial picture to chart out a comprehensive plan that align with your aspirations and life goals.
Even though wealth advisory and financial advisory differ in focus, they are not mutually exclusive. In fact, these disciplines often complement each other to provide a balanced approach to managing your finances effectively.
In other words, while wealth management assists you in building a solid foundation through prudent investment strategies, financial advisory ensures that all other aspects of your finances are in order.
What does a Wealth Advisor actually do for you?
A wealth advisor, who provides wealth management education and advisory, aims to maximize your investment returns through both strategic and tactical asset allocation.
A qualified wealth advisor understands that diversification without diworsification is key to managing risk and achieving long-term growth.
Making informed decisions to spread across various investment asset classes reduces the adverse impact of market volatility on your portfolio.
Strategic asset allocation (SAA) is not a set-once-and-forget exercise, but requires regular monitoring and adjustments to capitalize on ever-changing market conditions and changes in your financial situation.
Wealth advisors conduct regular portfolio reviews to ensure that your investments remain aligned with your financial life goals.
This is aptly called Tactical asset allocation (TAA), an active management portfolio strategy that shifts asset allocations in a portfolio to take advantage of market trends or economic conditions while mitigating potential risks at the same time.
When it comes to implementation of investment and allocation strategies, wealth advisors are almost required to have strategic alliances with many established, regulated platforms and fund managers that enable them to seamlessly access, prescribe & execute what’s recommended.
As a result, wealth advisors’ clients do not have to take the trouble to search, select and deal with multiple investment solution providers, in other words, ‘served on a platter’.
Wealth advisors also prioritize ongoing 2-ways communication with you to monitor progress toward goals and adjust strategies accordingly when needed. By maintaining regular contact and staying informed about changes in their clients’ lives, wealth advisors can dispense relevant recommendations & advice proactively.
Why hire a Wealth Advisor (a real one, not a sales person)?
Unlike traditional financial advisory that involves mostly insurance or investment products recommendations, the key benefits of having a personalized wealth management advisory is that it is specifically designed to meet your unique financial situation and goals.
And unlike generic financial advisory, a wealth advisor considers your individual circumstances, such as your preference, experience, risk tolerance and life goals while advising you.
Wealth advisory managers take the time to assess your current financial status and past financial endeavors to identify areas where you can optimize your wealth.
By conducting a thorough analysis of your portfolio, they can coach & educate you at the same time – things you overlooked or did not know before, thus widening your investment horizon.
This personalized approach ensures that every decision made in an informed way and in your best interest instead of the wealth advisor’s or any financial product/service provider. For example, when you walk in to any bank to invest in or buy anything, you feel empowered and confident to only choose the solutions that suit you, instead of being sold things you don’t need.
Instead, you want to become like them – feeling empowered, informed & confident 👇
The advisory sessions are conducted in no rush have been extremely helpful and have clarified a huge amounts of points which I wasn’t aware prior.
I now feel much better equipped to make the right decision being guided step by step by CF Lieu.
Of course the decision will be entirely mine but having the expertise of an expert from Malaysia who clearly understand the law, the rules , the practices if extremely valuable.
Pierre Perusset, former General Manager – The Ritz-Carlton Hong Kong (LinkedIn profile)
I’ve done a bit of this number crunching for a while, but I think the important thing for me was, have I missed something obvious in there?
What I wanted to really get out of this was that peace of mind post retirement, to be clear that there was nothing hidden in the background or whatever that I’d missed or misunderstood
The advisory sessions have with me delivered exactly that, so I’m very pleased with the good conversations we have.
And then the way you explain it, again, is very simple, very clear. It gives me a good insight into what I should be doing, what my options are, and taking it forward from there.
So, from a lay person, I appreciate that it’s very easy to get my head around the technical stuff. I’m equally pleased that it was very impartial; you just explained to me my options with no pressure.
Adrian Moody, Head of Safety, Health, and Environment Group, Asia – Synthomer, Johor Bahru (LinkedIn Profile)
Right Mindset in Investing, Not Shortcuts
I think everyone, should really go through proper 1on1 investing mentoring sessions like this instead of the usual financial product sales session.
I get a clear picture of the result I can expect based on my investing objectives in 10–20 years later.
Most importantly, to have a proper mindset & way in investing. Never go for shortcut or unsustainable get-rich-quick scheme, money game.
ps: the personal finance videos you put out on FB & YouTube are hilarious!
Keith Khor (33), Founder of Tuition Hero & Intelligent Consultancy
Malaysia’s Top 100 Most Influential Young Entrepreneur 2023 (LinkedIn Profile)
Valuable – Empathetic – Feels like talking to a friend
Reading Tony Robbins book – Money-Master the Game led me to seeking out an independent, fiduciary adviser. That’s how I came about engaging Lieu without any external referral or recommendation.
After an intense 3 months engagement period, Lieu had helped me to demystify a lot of intertwined things at the moment when my business and personal life started to take off.
Things I thought were extremely complicated but he managed to break them down into very simple, bite-size chunks which I could truly understand.
What I really appreciate about Lieu is that he effortlessly combines the logical and emotional aspect of managing money & investing when it comes to the How’s and Why’s
He deftly uses great analogies, and at the end of my 1on1 advisory sessions with him, I feel I derived a lot more value than what I initially expected.
Not to mention, Lieu possesses high level of empathy that made me felt understood – my needs, wants, objectives and situation.
The personalized coaching-consulting approach really worked well for me and I felt like I’m talking to a friend.
I’d recommend Lieu for independent advisory if you want your expectations to be exceeded.
Paul Yung, CEO at PM International Malaysia (LinkedIn Profile)
Biz owner (Fitline Malaysia), Malaysia’s Top 100 Most Influential Young Entrepreneur 2017
So glad we chose you to advise us!
Your communication style, how you organize things, and how you answer our questions with numbers have been very helpful in aligning both of us on the same goals but with different approaches to money management. 💯 marks on that!
We also feel you have done more than we initially anticipated from the 1on1 consultation.
At the same time, we appreciate you are not constantly up-selling. For us, that is very professional.
In fact, have gladly recommended you to some of our friends.
Jawish Hameed & Syakirin Rosik, VP of Engineering at Lottie Files, KL (LinkedIn Profile)
The sessions were fantastic! I would definitely like if I had a friend who’s in my situation and wants to speak to somebody who they can feel like comfortable and trust, I feel like I would definitely recommend, and I think your testimonials like they are very real.
Adam Malik, 28 (KL) Chief Operating Officer of a Digital Marketing Agency, PLTHORA (LinkedIn Profile)
How do Wealth Advisors get paid?
A wealth advisor consultation fee depends on the preliminary assessment of your needs, the time it will take, and the complexity of your case.
It’s also crucial to check whether your advisor is certified and licensed. A licensed wealth advisor is definitely certified, but a certified advisor is not necessarily licensed.
A certified but not licensed advisor might charge lower fees, but for the best advice, look for someone who is both certified and licensed. Here is where to check if a wealth advisor is licensed.
Understanding a wealth advisor consultation fee involves understanding the issues you need advice on. This helps the wealth advisor to estimate the time required to deliver the consultation.
The only way to determine this is through an assessment session, where the scope of advice needed is clarified, and an estimate of the time/process involved is transparently provided to you.
In other words, it will be unethical for a wealth advisor to quote you fees without knowing your unique financial circumstances.
If anyone tells you about the different ‘packages’ of consultation you can sign up to, without truly taking the time to understand you as a person, run the other way because that means they are just a financial products sales person disguised as a ‘wealth advisor’.
To make matters worse, the fake ‘wealth advisor’ may have a ‘sales target’ to meet – that is imposed on him or her by the financial product/service provider. This is not uncommon in a commercial banking environment, so be wary of it.
This is because not all wealth advisor professionals are created equal. They are differentiated by ethics and professional responsibilities. The quadrant diagram below will help you differentiate.
On the left side is a salesman who might be nice and might be sincere.
But, can you be sincere but sincerely wrong, yes or no?
And you move from the left side to the far right, the furthest right is a pure fiduciary, someone who is going to look out for you more than anything else.
But in addition, there are some fiduciaries that would be in the bottom right quadrant. That means they really are fiduciary, but they have low sophistication and low skills. They are very sincere, and they’re looking out for your best interest, but they’re not that skilled in advising on complex wealth advisory matters.
You want someone in the upper right quadrant, a trusted wealth advisor with a proven track record who will put your interest above anything else, and has the professional responsibility, sophistication and skills to advise you.
Are Wealth Advisors worth it?
It depends. Here are some relatable examples for you to decide:
Client case #1: 45-year-old business owner who sold his business for 8 figures sum
He worries about mismanaging his money due to lack of knowledge in prudent investment management. Also wants to preserve his wealth for future generations, at the same time prevent it from being squandered recklessly by his immediate family.
Paying 18,000 one-off advisory fees to go through a series of 1on1 consultation sessions, giving him enlightened clarity on investment management and setting up structures to avoid the aforementioned undesirable outcomes – for him, it is worth it.
Client case #2: 48-year-old corporate employee earning 50,000/month w/ mid 7 figures net worth.
She is experiencing career burnout, wants to know if she can retire early immediately without downgrading her lifestyle after retirement. Wants validation from a professional if she can ‘afford to do this now’ and see if she missed out any major considerations (financial blind spots) before making this life transitions. Else, what she can still do to afford comfortable early retirement as soon as possible.
Paying 10,000 one-off advisory fees to go through a series of 1on1 consultation sessions, providing her with the answers (and peace of mind, mind you) she is seeking, plus, the cause & effect of her future financial decisions – for her, it is worth it.
Client case #3: 32-year-old second – generation business owner inherits 8 figures from his family
Family-owned investment vehicle has diverse stakes in various businesses and real estate properties; all are illiquid and not generating enough passive cash flows. Humbly seeking recommendations to improve and reallocate his family assets allocation, at the same time exploring potentially higher yield-accretive opportunities.
Paying 15,000 one-off advisory fees to go through a series of 1on1 consultation to chart out a restructuring plan for all underperforming business/investments, at the same time squeezing out more passive income from it, while putting in place multi-layered strategies to balance risks with cashflow generation – for him, it is worth it.
Client case #4: 51-year-old expat in Malaysia who just got divorced, at the same time receiving a 7 figures retrenchment package
Confused and unable to make informed financial decisions due to information overload out there, and wants to avoid critical financial pitfalls with the payout from layoff. Wants to check and if there are any financial blind spots or leakages she is not aware of, if yes, then wants to fix them ASAP before they snowball out of control. Want to learn from people who’ve ‘been there, done that’ to minimize disastrous financial mistakes on top of putting together a Sustainable Income Replacement Plan
Paying a 20,000 advisory fees with 1 year retainer to go through a series of 1on1 consultation sessions, resolving all these financial issues affecting her emotionally post divorce – for her, it is worth it.
How and where to find a qualified Wealth Advisor?
Seeking recommendations from trusted sources can significantly narrow down your options when choosing a wealth advisor.
Reach out to friends, family members, or coworkers who have had positive experiences with financial advisors. They can provide valuable insights into their interactions with wealth advisors, giving you a better understanding of what to expect.
Having Specialized Credentials, Experience & Similar Values to yours
Remember, wealth advisors, also known as wealth managers, typically possess specialized credentials and experience in handling high-net-worth clients.
This includes advanced degrees such as an MBA or certifications such as Certified Financial Planner (CFP) or Chartered Financial Consultants (ChFCs) designation. As a result, wealth advisors are better equipped with the knowledge necessary to handle complex financial situations faced by affluent individuals.
Certification and licensing aside, experience also plays a vital role in assessing a wealth advisor’s ability to handle different financial situations effectively.
Consider how long they have been working as a wealth advisor and whether they have successfully advised similar clients or situations in the past. A preliminary conversation enables you to determine if the wealth advisor’s life values align with yours.
Having Divergent Thinking & Analysis Approach
Divergent thinking – multiple variables and also more than one correct answer or methods to a matter that you are trying to solve. Some answers/methods, though, are better/superior to others.
Doctors, lawyers and real wealth advisors – are the professions that usually uses divergent thinking and analysis approach. They fully understand the client’s needs, explore possible solutions, and then only propose the best one for the client.
On the contrary, an insurance agent, only needs to use a convergent thinking approach when he recommends one product from a limited range of insurance solutions to try to, hopefully, fit into the client’s need.
Having the Ability to Give you Better Optics
Making Better Financial Decisions comes from being aware of the Better Financial Options you have, some of which you may not be even aware of until you seek advice or second opinion.
The Advice or Second Opinion you get gives you Better Optics.
Better Optics leads to Being Better Aware of Options that you did not know exist, which then leads to Better Decisions, ultimately to what you really want in Life.
Gaining better optics, though, comes from 2nd order thinking. It is a way of thinking & analysis that considers the long-term consequences of actions and decisions, rather than just the immediate results.
1st order thinking is fast and easy, but it is simplistic and superficial. It happens when we look for a quick fix that only solves the immediate problem without considering longer-term consequences.
For example, whenever you are hungry, you make it a habit to just buy a Bubble Tea to satisfy your hunger.
On the contrary, 2nd order thinking is deeper & more deliberate. This means thinking about the health consequences of repeatedly drinking Bubble Tea loaded with high sugar when you are hungry instead of eating healthier, cheaper snacks like cashew nuts.
2nd order thinkers always ask themselves “And then what?” multiple times. They also ask themselves — What does the likely result and consequences look like in 10 minutes? 10 months? 10 Years?
2nd order thinking not only helps you solve problems better, it helps you avoid unpleasant consequences, and make better decisions for the long term.
Not thinking enough to consider 2nd and even 3rd consequences is the cause of a lot of painfully bad decisions.
Any qualified advisor whom you seek advice from would be able to do 2nd order thinking for your personal wealth…enabling you to see matters from a different angle and choices you are probably not even aware of. Sometimes, we don’t know what we don’t know, right?