If you have around £500,000 to invest, you are in a strong position when choosing a wealth manager. Your portfolio is large enough to meet the minimum investment requirements of many wealth management firms, giving you a choice between traditional discretionary managers, financial advisers offering investment management and increasingly sophisticated digital wealth services.
Use our wealth management finder to compare the best wealth managers for investing and saving £500,000.
How To Choose The Best Wealth Manager For £500,000
However, with £500,000 to invest, fees and the level of service you receive become particularly important.
Check the minimum investment
Start by checking each wealth manager’s minimum portfolio size. Some wealth managers are happy to work with clients investing £100,000 or £250,000, while others concentrate on clients with £500,000, £1 million or considerably more.
Ideally, you want £500,000 to place you comfortably within the wealth manager’s target client base rather than only just meeting its minimum. This can affect the level of service and investment options available to you.
Understand what you’re actually getting
Wealth management can mean very different things depending on the firm.
Some wealth managers primarily provide discretionary investment management, where they make investment decisions on your behalf. Others combine portfolio management with comprehensive financial planning covering pensions, retirement, tax planning and estate planning.
Consider which services you actually need. If your only objective is to have £500,000 professionally invested, paying extra for extensive financial planning may not provide much value. But if that £500,000 sits alongside pensions, property, a business and other assets, broader financial planning could be extremely useful.
Pay particular attention to fees
With a £500,000 portfolio, seemingly small percentage charges quickly turn into significant sums of money.
For example, a 1% annual charge represents £5,000 every year. If the total cost of investment management, advice, funds and custody reached 1.5%, that would be £7,500 a year.
Ask every wealth manager for the total expected annual cost in both percentage and pound terms. You should understand management and advice fees as well as underlying fund charges, custody or platform fees and transaction costs.
Then consider whether the service you are receiving justifies that cost.
Bespoke portfolio or investment model?
It is also worth establishing exactly how your £500,000 will be invested.
Some wealth managers will build an individual portfolio for you, potentially holding shares, bonds, funds and other investments directly. Others will place you into a centrally managed portfolio based on your attitude towards risk.
A model portfolio isn’t necessarily inferior and can sometimes be cheaper and more efficient. However, if you are paying a premium for “bespoke wealth management”, make sure the portfolio really is being tailored to you.
Compare investment performance properly
Don’t simply choose the wealth manager displaying the highest historical returns.
Ask to see performance over several years and compare it with an appropriate benchmark. Make sure you are comparing portfolios with similar levels of investment risk and look at performance after fees where possible.
More importantly, understand how much risk was taken to generate those returns and how the portfolio performed during falling markets.
Consider your wider finances
£500,000 rarely exists in isolation. You may also have pensions, ISAs, cash savings, property or other investments.
A good wealth manager should understand your overall financial position before deciding how your portfolio should be invested. For example, someone approaching retirement may need a very different strategy from a 40-year-old investing £500,000 following the sale of a business.
Look for value rather than prestige
Finally, don’t automatically assume that the biggest or most prestigious wealth manager will be the best home for £500,000.
At this portfolio size, smaller wealth managers can sometimes provide more personal service, while larger firms may offer better technology, broader investment research and greater resources.
The best wealth manager for £500,000 should ultimately provide the right combination of investment management, financial planning, personal service and reasonable fees. Most importantly, you should be able to clearly understand what you are paying for and why the service is worth the cost.