CRIMSON WEALTH INSIGHTS
A practical framework for evaluating fit, capabilities, costs, conflicts, and continuity.
After years of managing wealth for high-net-worth families, I have seen the same pattern repeatedly: clients come to me only after a frustrating experience with their prior advisor.
The problem is rarely a lack of effort. These sophisticated clients review credentials, interview advisors, and seek recommendations from people they trust. But they often focus on what is easiest to compare – brand recognition, a headline fee, or personal chemistry – rather than on the factors that determine whether the relationship will actually work.
Four Major Mistakes
- Beginning the search before defining the family’s real mandate
- Staying with an advisor the family has outgrown
- Choosing the person who makes the best first impression
- Hiring a firm that outsources investment management
1. Beginning the Search Before Defining the Family's Real Mandate
An advisor can only be a good fit relative to a family’s needs. A household preparing to sell a business, manage a concentrated stock position, redesign an estate plan, or educate the next generation all have different mandates.
Before interviewing firms, write a short family brief that identifies:
- What is your investment priority and horizon? Is your goal wealth preservation or wealth creation?
- Beyond investment management, what additional services do you need?
- The current status of estate planning. Is everything in place, or do you need the financial advisor to work with the family, accountants, and trust and estate attorney to create or update the plan?
- What three to five decisions are likely to matter most over the next several years?
- Which family members, trustees, business partners, or other stakeholders need to be involved?
- What was working – and not working – in the prior advisory relationship?
The Investment Priority
Of these items, the most important is the first – the investment priority – because it is where advisors most often receive mixed messages. Clients say they want the advisor to grow their wealth, but then find they cannot emotionally tolerate any losses along the way. This puts advisors in an impossible position.
I once had a client repeatedly threaten to fire me because one of their eleven investment accounts was down – even though the overall portfolio was up more than 30% for the year.
2. Staying with an Advisor the Family Has Outgrown
High-net-worth families have complex needs, and those needs compound over time. The advisor who served your parents well for the past 30 years may not have the skillset to keep up. Very few financial advisors are truly equipped to manage the full portfolio of a high-net-worth family – particularly when it involves illiquid alternatives, concentrated positions, and sophisticated tax strategies.
Best case, these advisors know enough to bring in third-party experts. Worst case, they try to do it themselves and create a mess. I will always remember one estate where the financial advisor tried to generate income from low-basis stock held in trust by selling covered calls. The execution was so badly bungled that it created a tax catastrophe for the trust and a financial crisis for the client.
3. Choosing the Person Who Makes the Best First Impression
Trust and personal chemistry matter. An advisor may eventually participate in some of a family’s most sensitive decisions, from selling a business to transferring wealth to the next generation. But rapport alone is not evidence of capability.
Many firms create an impressive prospect experience led by senior professionals. After the relationship begins, however, the work gets delegated or outsourced. The people who win the business are often not the people who manage the account post-decision.
Before making a decision, establish:
- Who will be the family’s primary point of contact?
- Who oversees investment, planning, and implementation decisions?
- How will senior advisors participate after onboarding?
- Which specialists are employees, affiliates, or outside partners?
References are most useful when the questions go beyond whether a client likes the advisor. Ask how consistently the firm followed through, how it responded during a complicated event, and whether service changed after the initial onboarding period.
4. Hiring a Firm that Outsources the Investment Process
Many wealth management firms use third-party investment managers, outsourced CIO (oCIO) providers, or off-the-shelf model portfolios to manage actual investments.
Taking a step back, this is indefensible, and no high-net-worth family should tolerate it. You are hiring a firm to manage your investment portfolio; if it does not have the capability to do that internally, why hire it at all? These firms point to the other “value-add” they provide, such as financial planning – but financial planning is not worth 0.50% – 1.00% annually.
Damage that Outsourcing the Investment Process Causes
The damage shows up in three ways. First is the friction of additional costs. oCIO fees typically range from 0.1% to 0.5% of assets, depending on complexity and service – a hidden layer stacked on top of the quoted management fee.
Second, third party investment firms often push their own products, to the detriment of the client. BlackRock or DFA model portfolios, not surprisingly, promote their own funds – rather than the best funds for the client, or rather than holding securities directly and avoiding fund-level costs altogether. Why? Because these firms make money on those funds, either directly through the management fees they collect or indirectly through fund-sponsor payments.
Finally, and most importantly, outsourcing breaks the link between the client’s investment goals and the investment execution. A third-party firm simply cannot know the client well and will default to generic decisions. The costs are real: unnecessary tax consequences and suboptimal risk management.
Time and again, clients have come to me frustrated by years of investment underperformance and excess tax friction – and the common thread was an advisor who had outsourced the investment management.
A More Effective Selection Process
Beyond Brand Names and Big Numbers
The best advisor is not necessarily the firm with the most recognizable name, the broadest product menu, or the strongest recent performance. It is the firm whose capabilities, incentives, and operating model align with the family’s actual needs:
- Write the mandate. Define the family’s priorities, needs, and stakeholders before the first meeting – not after.
- Use the same scorecard. Evaluate every firm against identical criteria so the comparison reflects substance, not salesmanship.
- Meet the people who will do the work. Insist on meeting the actual service team – not just the senior professionals pitching the relationship.
- Test real scenarios. Ask how the firm would organize a business sale, concentrated position, trust distribution, family disagreement, or large liquidity need.
- Verify disclosures and background. Review the applicable Form CRS, Form ADV, agreements, fee schedules, and public disciplinary information.
- Put the operating model in writing. Document scope, service cadence, responsibilities, economics, conflicts, and the transition plan before moving assets.
Red Flags Worth Slowing Down For
- Vague answers about who will actually serve the family after onboarding, or about the firm’s true capabilities
- Capabilities described mainly as access to a network
- Incomplete explanations of total costs, outside compensation, or affiliated relationships
- An unwillingness to document responsibilities, service expectations, or implementation steps
The Bottom Line
Choosing a financial advisor is one of the most important financial decisions a high-net-worth family will make. The right relationship compounds quietly for decades – through disciplined investing, coordinated tax and estate planning, and steady judgment in difficult moments. The wrong one compounds too, in layered fees, missed opportunities, and avoidable tax friction.
Are you measuring What's Easy - or What Matters?
The four mistakes above share a common root: substituting what is easy to evaluate for what actually matters. Brand names, first impressions, and polished pitches are visible from the first meeting. Capabilities, incentives, and the people who will actually do the work take effort to uncover – and they are what determines the outcome. Families that define their mandate before the search begins, ask hard questions about who does what, and refuse to accept outsourced investment management dramatically improve their odds of getting this decision right.
So, take the time to run a disciplined process. Write the mandate, meet the real team, test real scenarios, verify the disclosures, and put the operating model in writing before moving a single dollar. An advisor who welcomes that level of scrutiny is telling you something important about how they will serve you – and so is one who does not.