What would you do if you won the lottery tomorrow? Better yet, what if you went "shootin' for some food" with your Beverly Hillbillies buddy Jed Clampett and "up from the ground came some bubblin' crude"?
Wealth happens, even if it materializes in the more conventional way like the gradual accumulation of your fortune through years of perspiration and inspiration.
What are you going to do with all of the money? Stashing the money under your mattress can't be fun. I hear that gold coins and rolls of quarters make a bed really lumpy.
Until the rubble from real estate market clears, you wouldn't chance living the nervous life of a condo flipper. Your cousin suggests that you can make a killing dabbling in penny stocks, but you're smarter than that. You can always turn to the local bank, but the meager interest rates being paid on savings vehicles like CDs and money market funds are disheartening.
As long as you have a sizable nest egg -- in the range of hundreds of thousands or more to invest -- you may be a prime candidate for a wealth management firm. As the name implies, wealth management specialists cater to affluent individuals with significant assets under their watch. More than just a conventional full-service brokerage firm, you can expect a great deal of handholding, personalized attention, and an asset management experience that is custom-tailored around your risks and expectations.
"We're financial architects," explains Myrna Rivera, founder of San Juan-based Consultiva. Ms. Rivera spent 17 years at Smith Barney before striking out on her own. She sensed an opportunity in breaking from the full-service pack, where financial advisors are often shackled to promoting a limited number of in-house mutual funds and stock recommendations. Instead of funneling client assets into costly mutual funds, Ms. Rivera seeks out attractive no-load mutual funds and low-cost exchange-traded funds, collecting a small percentage of the assets (0.5% annually on a sliding scale that gets lower with larger accounts). In other words, she collects $2,500 a year for watching over a $500,000 account, which is generally the minimum to open a wealth management account at Consultiva. The company's and the client's interests are aligned, because both want assets to appreciate.
Even though her office is in Puerto Rico, Consultiva's estimated 200 clients are scattered all over the United States, with a few in the Dominican Republic. She travels a great deal, making it a point to visit most of her clients at least once a year. When's the last time that your broker flew out to meet you? Exactly. That's the kind of thorough service that sets wealth management apart from more mainstream brokerage experiences.
Inverting the Inversionistas
Stocks have outperformed the other asset classes over the long haul, but it's hard to find Hispanic investors.
"A large percentage of Hispanics are just starting to build their wealth," suggests Sam Ramirez Jr., head of the wealth management division at Samuel A. Ramirez & Co.
As Mr. Ramirez sees it, many Latin Americans are recent arrivals in this country, merely a generation or two removed from their country of origin. They are focused on short-term goals, like housing and education for their children. Wealth accumulates over generations, a distinction that is likely to find Hispanics entering the market in larger numbers in the future, but keeping those numbers in check for now.
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