When Should You Get a Wealth Manager? – Is £250,000 enough to use a wealth manager for investing?

When to use a wealth manager

A user has asked a question about finding a wealth manager: I’m looking to invest approx £250-300k for the medium term (say 5 years or longer). Is this enough to use a wealth manager?

Can you use a wealth manager with a portfolio fo £250,000?

Whilst this very much depends on your investment objectives, wealth managers are now more than ever taking on clients with small initial deposits with the expectations that portfolios will grow over time.

In fact, when we interview CEO’s of wealth management firms, one of the key themes is that they are keen to start relationships with clients as soon as possible and sometimes with as little as possible. After all, when you are choosing a wealth manager you are in fact entering into a very long term relationship, so the better you know them and the clearer understanding of your investment objectives they have the more successful the partnership maybe.

What do the wealth managers say about investing £250,000?

Oliver Tregoning, Head of Marketing, JM Finn is keen to highlight that whatever your account size all clients get the same service:

Investing with a wealth manager should not be exclusively for those with larger portfolios. At JM Finn we do not have a stated minimum investment size and prefer to pass the decision on whether or not to take on a client to the individual investment manager. In reality most portfolios less than £100k are invested in a pooled vehicle due to the fees involved. With an average portfolio size of around £350k we look after many smaller portfolios and we give each and every client a dedicated investment manager as their primary point of contact, even if they end up being invested in a pooled fund. It is this personal contact that we feel sets us apart, as no matter what level of investment you are looking to make, we all need a guiding hand.

James Roberts, Founder and Managing Partner of Partners Wealth Management is an advocate of how technology means that wealth management is now more affordable than ever.

We sat down with James Roberts in his Partners Wealth Management office a while ago where he explained how wealth management should be accessible to all. He had this to say about the part technology plays in wealth management:

Yes the best firms are now set up with technology meaning that an individual starting at £250k can form an enduring relationship with an adviser and together build a portfolio bespoke to their needs.

David Bull, a partner at Partners Wealth Management, added:

Most wealth managers would probably say their service starts to add value for clients investing £250,000 and above. However it really depends very much on the reasons behind wanting to make the investment, your other income and assets, and what you are hoping the Wealth Manager will add for you.

Firstly, you are right to set 5 years as a minimum investment term. As we have seen recently, sudden and unpredictable market falls can happen at any time. A diversified portfolio will recover, but allowing it time to do so is of course imperative. Before making any investment, it is critical to plan for how you would cope if markets were going through a period of underperformance, for example by being able to call on cash savings or other income. If you’d struggle, then investing at that time, or that sum, may not be the right thing for you. Cashflow forecasting, which Partners Wealth Management undertake for our clients, can demonstrate weak-spots in someone’s financial planning, making for far better investment choices.

An investment adviser should want to understand what your reasons are for investing, and your investment preferences. Common reasons include school or university fees planning, retirement, or just long-term savings. Once this is understood, the manager can provide much more tailored options, taking into account such critical factors as your risk profile, capacity for loss and tax position.

Style of management is also very important – do you prefer a hands-on, advisory service, or increasingly common and sophisticated approaches such as model portfolios or discretionary management? These place more responsibility in the investment managers’ hands, and can come with advantages of speed of implementation, tailoring of the portfolio, and less day to day involvement for the client.

Specific investment mandates, such as Socially Responsible Investing (SRI), are becoming increasingly popular as clients look to the future, and building this into someone’s wider plans is again something which an experienced adviser will be able to offer.

For more information about choosing a wealth manager, you can read our guide on how to compare wealth managers.

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