In terms of the business model, members will pay an upfront fee, but this will not guarantee them the mark; they must also meet the standards.
Fees are another issue the industry grapples to communicate effectively on. Black says you can get a better “starting point” from RIAs, which publish their rates, but that the wealth management sector as a whole “really falls down” on giving the total asset weighted cost to the client.
There’s “clearly a lack of transparency about total cost to client,” he says. “And that’s a problem because clients have a right to know exactly what they’re going to pay.”
However he adds that some of the very best RIA firms are “absolutely candid about that,” and will even report net of all fees.
One response to a lack of transparency or comparability among wealth managers has often been that it is not a “consumer good” – it’s a people business. While this is true, it should nevertheless be easy for an individual to select a wealth manager that, at a minimum, is competent and honest, and to understand what services they are getting for what price. To this end, real efforts in the area of transparency and raising standards across the board are to be celebrated.