Discount brokers have their place and many present a great value, but for investors who want professional wealth management of their investment accounts, a full-service investment firm is the answer.
The Best Investment Firms:
- Vanguard Personal Advisor Services
- Charles Schwab
- J.P. Morgan
- Edward Jones
- RBC Wealth Management
- Merrill Lynch
- Fidelity Investments
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Why Choose a Wealth Management Firm?
Investment firm fees or commissions may be higher than with discount brokers, but overall costs are often lower because with a full-service investment firm, you aren’t left shooting in the dark.
Whether it’s time to rollover a 401k into an IRA, start an IRA or college fund, or build an investment account simply to invest for your future, investors have a growing number of options. Online brokers have taken the market by storm, offering low costs trades, technical charts, webinars, and online education centers to help investors learn the ropes, research, and trade.
Robo advisors promise to bridge the gap between DIY discount brokers and full-service firms by providing guidance or automated portfolio management based on predetermined criteria. Even with all the online options available, some investors prefer a more personal touch and the knowledge that someone they can trust will handle their portfolio for and help guide decisions. Because there’s often some crossover in services, investment firms might offer a robust online platform for self-directed investing but also offer full-service advisors or account management.
How to Understand Your Investment Goals
Every investor has his or her own wealth management goals, balancing risk against safety, or the chance to earn outpaced gains against dividend income and steady appreciation. This is where a full-service investment firm can really shine for investors by pointing the way to the best solution or basket of options that can help you realize your investment goals.
Just as important as shining a light on the options that match best with your investment strategy is the guidance that can explain why an investment vehicle, stock, or fund that looks like a perfect fit may have downsides.
One of the biggest benefits of choosing an investment firm is that the firm’s advisors can help you to invest in a way that matches your long-term goals for safety and earnings — but also point out potentially problematic investments or likely underperformers. Nearly everyone who has ever invested on their own has discovered that not every investment goes up in value. Utilizing a full-service investment firm doesn’t guarantee you’ll never have losses, but many losses can be avoided or minimized.
What to Look for in an Investment or Wealth Management Firm
1. Overall customer satisfaction
No investment firm can be a perfect fit for every investor, but the best investment firms focus their efforts on the areas most important to their clients, providing top-notch service at the acceptable expense of higher commissions or fees than discount brokers.
2. Dedicated financial advisors or teams
Much of the attraction for a full-service investment firm is the availability of dedicated financial advisors or teams, people who understand your investment goals, listen to your concerns, and who often know you by name.
3. Customer service and support options
The availability of multiple support options for account questions anytime of day or night has become a must-have feature, with the understanding that advisors are only available during business hours.
4. Reasonable commissions and fees
Expect to pay more when investing with a full service investment firm as opposed to a discount broker. However, if fees or commissions are too high, investment returns can be adversely affected by the headwind created in trading or management costs.
5. Information resources and investor research tools
Investors with a healthy curiosity will want to do their own research or learn more about investments they’ve either made or are considering.
6. Variety of products and investment vehicles
The number of investment vehicles has increased dramatically in recent years and the best full-service brokers will provide options to round out your portfolio with investment options for nearly any type of asset class.
7. Investment performance
For fully-managed accounts, investment performance becomes a big part of an investment firm’s report card for investors.
8. Additional wealth management or estate planning solutions
Sometimes investments are only part of the picture. The availability of trusts, life insurance, and estate planning options can help turn gains into a legacy of lasting wealth.
Drawbacks of Using an Investment or Wealth Management Firm
When choosing a full-service investment firm, you’re often trading autonomy for management. This isn’t necessarily a bad thing, but it is different than what investors will find with most discount brokers. In exchange for the management or guidance provided by a full-service investment firm, fees or commissions will also be higher than with some lower-cost options.
You’ll have a new silent partner in your investment account, quietly taking a percentage — in good times and in bad. Warren Buffett is famous for his quote, “Price is what you pay, value is what you get.” This investment maxim can be applied to the notion of investment management cost as well. What’s often overlooked is the ability of a managed investment strategy to keep you out of trouble.
Many individual investors using DIY brokerages lose money. A management team’s or advisor’s ability to keep your account in the black — at least most of the time — is part of the value you get for the price you pay in higher commissions or fees. Be aware that some investment firms charge a transfer fee if transferring your account to another broker. You can probably expect transfer fees to be waived if transferring to another location within the same firm.
Account Funding for Investment Firms
A variety of methods to fund accounts is another must-have feature for investment firms. A particular interest is the ability to automatically invest on a weekly or monthly basis, taking advantage of dollar cost averaging to build your account.
For most households, it’s easy to establish an amount that can be safely invested on a scheduled basis and that won’t be missed from the budget.
Additional amounts can be invested at your discretion or when you come into extra cash, such as selling an asset, earning a bonus, or getting a large refund. Many investment firms require a minimum investment amount or offer lower management fees for larger investment accounts.
Investment Firm Trading Costs
With full-service investment firms, trading costs are often more accurately described as management fees. Certain types of trades or investments may have a set commission, typically ranging higher than the per-trade commission costs available from discount brokers.
Additionally, investors can expect a management fee ranging from below 1% up to over 3%. Management fees apply in good years and in bad, which means that in an investment year in which your account is essentially flat, you could show negative growth due to management costs.
Accounts with a higher dollar value are often rewarded with lower management fees and smaller accounts may have a fixed annual fee as well.
Best Wealth Management and Investment Firms
The miscellaneous fees and commissions as well as account restrictions such as minimum required balances are a trade-off for service that can’t be found with the lowest cost providers.
From personalized account management to goal-driven investment strategies, the best full-service investment firms treat investors like more than just an account number. You might even get a signed birthday card from your advisor or management team
1: Vanguard Personal Advisor Services
With Vanguard Personal Advisor Services (VPAS), Vanguard once again changed the investment industry. VPAS came about a few years ago, offering a product that is almost a happy marriage between a robo-advisor and a traditional financial advisor.
A Vanguard Personal Advisor works directly with you to understand your goals and financial needs. From there they implement a financial plan to help you achieve whatever your goals are.
Vanguard brings the low investment fees they are known for with their index funds to VPAS. A human advisor will help manager your investment portfolio for as low as 0.3% of all your assets under management. Most other wealth management firms will have fees above 1% anytime a human advisor is being used.
The account minimum needed for a VPAS account is about the same compared to other investment management firms. You will need $50,000 in investable assets to be able to open a VPAS account.
2: Charles Schwab Asset Management
With five stars in nearly every category in a recent JD Power’s customer satisfaction survey which rated full-service brokerages, Schwab proves its value to investors seeking full service investment management by winning the survey’s top rating based on its average scores in all categories.
With a minimum investment amount of $1,000 for standard accounts and $5,000 minimum investment for managed accounts, Charles Schwab aims to be the investment firm that’s accessible to investors at nearly any level.
Investors with at least $25,000 in their account qualify for a one-on-one portfolio consultation. Most account interaction can be handled online or by phone, but for investors who prefer to meet in person, Charles Schwab offers more than 300 local branch offices throughout the U.S. Schwab boasts over nine million customers, providing both no-fee professional portfolio management or self-directed investing.
Additional service-level tiers are available, including Schwab Managed Portfolios or Diversified Managed Accounts, bringing more personalized service for larger investment accounts.
3: J.P. Morgan Asset Management
J.P. Morgan Securities is the wealth management offering of J.P. Morgan Chase (not to be confused with the bank!). J.P Morgan is one of the largest investment management networks with than 4,400 financial advisors on staff. As with other firms on this list, J.P Morgan Securities advisor help investors manage their portfolios and overall wealth development plan.
J.P. Morgan has a variable asset management fee that changes depending on how large your account size is. The highest management fee is for those with between $50,000 and $250,000 in assets. Those investors will pay a 1.45% management fee. The lowest management fee available is 0.30% (the same as Vanguard PAS) but you would need to have $50MM in assets to hit that tier. Lower net worth individuals may find VPAS to be better suited for their needs.
4: Edward Jones
Edward Jones, founded in 1922, has been a trusted provider of portfolio management services and investment advice for nearly a hundred years. With over 13,000 offices in 50 states, Edward Jones is a national investment firm that’s also your local investment advisor.
Offering more locations than any other brokerage firm in the country has helped Edward Jones to grow to over seven million clients. The firm also has nearly 600 locations throughout Canada. Edward Jones prides itself on its team of financial advisors who come from all walks of life, bolstered by a nationally recognized financial advisor training program.
This gives their team a deep understanding of the concerns and goals of American households as well as the knowledge needed to provide valuable investment guidance. Fees with Edward Jones can be higher than with some other firms, particularly if there is a lot of churn in the equities or funds you hold in your account. Management fees on accounts up to $250,000 are at 1.35%, but mutual fund fees can easily drive costs up to 2%.
For investors focused on the long-term, the management fees of up to 2% may still provide a good value in exchange for personalized service and investment guidance.
5: RBC Wealth Management
RBC targets its wealth management services toward the needs of affluent or high net worth households as well as servicing institutional clients. With more than a century of experience, RBC brings a deep understanding of long-term growth and a diverse expertise stemming from its global reach.
As the world’s fifth largest wealth manager when measured by assets, RBC has earned trust and credibility with the largest of clients. It’s telling that RBC often refers to its advisors as wealth managers, indicating a long-range perspective and a broad spectrum of solutions.
The company also squarely focuses on individualized solutions, delivering customized strategies and personalized service. More than simply an investment firm, RBC also offers comprehensive estate planning solutions and life insurance and legal trust options that can integrate with long-term investment strategies to help preserve wealth and minimize tax liabilities.
With a variety of services available, fees vary over a wide range and can be higher than with some other investment firms. However, for basic investment services, fees are usually competitive with other top-tier firms.
6: Merrill Lynch
Merrill Lynch, now owned by Bank of America, brings the resources of two financial juggernauts, with BOfA Merrill Lynch Global Research being one of the most well-respected global research firms in the investment world.
ML’s nationwide network of financial advisors boasts the largest number of Certified Investment Management Analysts (CIMA) among leading investment firms. As an essential part of a successful investing strategy, Merrill Lynch advisors build dedicated one-on-one relationships with clients.
This places a high priority on transparency so you’ll understand how investment choices align with your goals, how well your investments are tracking those goals, and have a clear understanding of what you’re paying.
Full service investment firms aren’t low cost brokers, and Merrill Lynch is no exception, with advisory fees often averaging 1% or higher in addition to management fees for mutual funds held within your portfolio as well as other associated trading costs. Investors who value a tight integration with Bank of America accounts and a world-class research firm to vet investment choices will find value with Merrill Lynch.
7: Fidelity Investments
Servicing a broad spectrum of investor profiles, Fidelity Investments offers low cost trades for self-directed accounts as well as portfolio management and more complex wealth management services.
For investment accounts starting with $50,000, Fidelity can design a strategy to help you invest for retirement or other financial goals. Additional account tiers for accounts with a minimum $200,000 investment offer either tax sensitive investment management or separately managed portfolios investing in specific equities or fixed income markets.
Fees for managed accounts vary widely with Fidelity, ranging from .20% up to 1.7% with the lowest fees available to fidelity’s larger accounts. The ability for investors to maintain a separate trading account as well as a long-term managed account allows additional flexibility and a way to channel gains from individual investments to longer-term strategies or provide easy liquidity not often associated with managed accounts.
Over the past several decades the broad market and wide indexes such as the S&P 500 have out performed most managed funds and the same may apply to managed portfolios.
By a certain logic, simply investing in an ETF or low-cost fund the tracks brought index may outperform the returns available through active management. However, for wealth planning or for specific investment goals, returns are only one part of the big picture. Important elements such as tax treatment on gains or tax-advantaged solutions can easily offset a difference in performance compared to broad indexes.
More importantly, sometimes a more conservative investment allocation approach is required depending upon market conditions, trends, or investment goals based on age. Avoiding costly investment mistakes is just as crucial to overall portfolio growth — and capital preservation — as gains, providing an often-overlooked advantage to using a full-service investment firm as opposed to self-directed investing.
A dedicated financial advisor or team can focus your portfolio on growth goals while also defending against losses, helping you to keep more of what you’ve earned.
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