Equirus Wealth
03 Jan 2024 • 4 min read
As a high-net-worth individual (HNI), navigating the intricate financial landscape requires a strategic approach.
Choosing the right wealth advisor is a pivotal decision that can significantly impact your financial well-being.
To ensure you are making informed choices, it is crucial to ask your wealth advisor the right technical questions.
A High-Net-Worth Individual (HNI) in India is characterized by substantial financial standing, holding investable assets exceeding 5 crores. These individuals strategically navigate markets, often with expert advisors, influencing industries through impactful investments.
Here are some key points for the HNIs to discuss with their wealth managers:
Understanding how your portfolio is constructed is fundamental. Ask your advisor about the models or risk-adjusted return frameworks they used and whether these models have been historically validated.
Seek an explanation for the rationale behind your portfolio's asset allocation. Ensure it aligns with your risk tolerance and financial goals.
Inquire about recommended alternative investments and the due diligence process employed for their selection.
Request a detailed breakdown of the fee structure, including any hidden fees or performance-based compensation. Seek a projected fee breakdown for the next year.
Ask about the metrics used to measure and report portfolio performance. Inquire about benchmarks and adjustments for fees and expenses.
Understand how prepared your portfolio is for various market downturns or economic scenarios. Request insights into stress tests conducted and their implications.
Ensure there is a strategy in place to manage liquidity for potential capital needs, such as emergencies or planned expenditures.
Inquire about the strategies and tools employed to mitigate losses and protect your wealth during volatile market conditions.
Ask about strategies for optimizing your portfolio for tax efficiency, considering income taxes, capital gains, and estate taxes.
Understand how your investment portfolio aligns with your estate plan and trust structures. Seek recommendations to minimize tax implications at death.
If you're interested in charitable giving, inquire about tax-advantaged strategies to maximize the impact of your donations.
Clarify the frequency and channels of communication about your investments. Check if customization based on your preferences is possible.
Ask about the level of detail and frequency of portfolio reporting. Inquire about customization options to track specific metrics or investments.
Check the technology platforms or tools offered for real-time access and monitoring of your portfolio information.
Seek an explanation of your advisor's investment philosophy and how it aligns with your values and goals.
Inquire about the track record of performance for similar client portfolios, including average returns and risk-adjusted ratios.
Ask about steps taken to stay current on investment trends and regulations, as well as the professional licenses and certifications held.
Demand full disclosure of any potential conflicts of interest and the steps taken to manage these, ensuring your best interests are prioritized.
Explore the existence of a succession plan in case your advisor is no longer able to manage your portfolio. Understand who will oversee your investments in the interim.
Remember, your relationship with your wealth advisor is a partnership. By asking these technical questions, you actively engage in the decision-making process, ensuring you comprehend the rationale behind your investment decisions. Don't hesitate to seek detailed explanations and clarification, as this approach empowers you to make informed choices and maximize your financial success.
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