Unwrapping wealth management

An industry insider offers a peek behind the curtain

One of my favourite things about having written Low Risk Rules, and continuing to write online, is the opportunity it has given me to meet like-minded people in the investment business. Recently I was fortunate to connect with Charlotte Beyer, founder of the Institute for Private Investors. She introduced me to her book Wealth Management Unwrapped.

I wish I had seen her book earlier, because in many ways Charlotte was able to more fully realize the vision I had for my own book. It covers a lot of ground in an approachable, humourous way with quick, bite sized sections and terrific graphics that help to explain and enhance the text. Plus, anyone who can compare a high net worth investor scouting for an advisor with the baby bird in the childhood classic Are You My Mother? is on the right track.

In the first half of the book, she covers a lot of the same ground as I do in Low Risk Rules, encouraging investors to take charge of their wealth, and to critically evaluate advisors and investment recommendations. In fact, some of her takes are so close to mine that had I read her book first, I might have had to make several changes to mine in order to avoid accusations of plagiarism.

As early as page 4, I was able to check off two very similar points made in both books. She starts by quoting Charley Ellis, reminding investors that you “own the central responsibility… (which) cannot be delegated; it is your job, not theirs.” I wrote a whole chapter titled “Take Responsibility,” arguing that taking responsibility for the strategies implemented in your investment portfolio is a critical element into building the confidence and conviction that allows you to remain invested during market downturns.

Then further down the same page, she writes:

You say you want the highest return without taking too much risk. You intend to find the “best” advisor. You expect your advisor to select the “best” money managers, hedge funds, or mutual funds, and to have acces to the “best” investment products. You wish to have the “best” asset allocation for today’s market.

Sadly, you are off to a stumbling start — and you won’t get very far. You may even hit a dead end.

An idea which I also echoed in Low Risk Rules:

I’ve worked with clients in the past who have an idea in their heads that they can somehow optimize their portfolio. They’ve obviously sat through too many academic finance presentations. Outside of finance textbooks, there is no such thing as an optimized portfolio.

To be clear, there are many permutations of shitty portfolios, but much rarer are those that are built for what you are actually trying to accomplish.

So I’ve turned the page once and I’m already on Team Charlotte. This is going to be a great book. And indeed it is.

Wealth Management Unwrapped is all about giving individuals and families the tools they need to develop strategies and identify advisors who can act as true partners in building and protecting wealth. It covers all the necessary bases - understanding the basics (in particular how to determine your risk tolerance and make sure the fees you are paying are fair), how to hire (and fire) investment managers, estate planning considerations, dealing with the downsides of wealth, and so much more.

Of course, it’s a messy process, and tradeoffs abound. Charlotte does a great job of walking through the decision making process, and providing direct advice based on her own years of wisdom. She acts as an objective and friendly guide, helping investors navigate the wealth management industry minefield.

Having worked with some of the world’s wealthiest families, she warns against being lured by the promise of being “allowed” to pass the “velvet rope” in an “exclusive” investment. This was one of my favourite parts of the book, because I spend a lot of time warning investors away from these “prestige investments.”

A chapter targeted specifically at female investors has good advice for anyone, including the advice to see yourself as CEO of “MyWealth, Inc,” encouraging investors to treat the management of their portfolios just as you would a business, echoing the advice I gave in several parts of Low Risk Rules.

The book’s appendix is directed squarely at advisors, drawing corollaries between the advice given to investors earlier in the book. A good reminder for all of us, but particularly for those just beginning their journey.

In short, I can’t recommend the book enough for anyone looking for this kind of guide. Few authors are able to approach this subject without pushing an agenda or “talking their book.” Charlotte is able to do so with honesty and humour, in an approachable and readable way. It’s well worth your time.