Reputable investment management firms have a few key qualities in common.
On a basic level, these businesses manage and invest client wealth. That can, and should, include understanding clients’ goals and risk tolerance. Building an investment strategy that takes those goals and acceptable risk levels into account is also crucial.
However, there is significant variation in how individual investment management firms operate. Some take a more standardized approach. They may offer a limited range of services and only put so much effort into understanding clients’ needs and objectives.
Boutique investment management firms sit on the other end of this spectrum. They tailor their foundational strategies and services to their clients. These boutique firms focus on developing a deep understanding of their clients, building strong relationships and emphasizing continuity.
Let’s take a closer look at boutique wealth management and investment management. We’ll focus on the factors that set boutique asset management firms apart.
Defining Boutique Financial Planning Firms
In general, a boutique is a smaller business that offers a selection of goods that are unique or especially desirable. They tend to offer a higher level of service than is provided at larger, mass-market stores.
Boutique is most commonly used to refer to clothing stores and similar retailers, but can and does cross over into areas like professional services.
So, what makes an investment management firm fit into this category? As Investopedia explains, boutique firms aim to better address a specific market or type of investor that may not be well-served otherwise. Let’s take a closer look.
Specialized Services and Clientele
Boutique investment advisory firms focus on a certain type of client. This may include clients who have a certain amount of assets ready to invest, or an emphasis on certain approaches to investing. The specifics vary from firm to firm, but should always be made clear to prospective clients.
For example, Dechtman Wealth Management seeks out clients who:
- Want to take a straightforward approach to investing and wealth management and benefit from informed guidance from experienced professionals.
- Have investable assets of $500,000 or more. Our services and experience are best suited to those clients.
- Are seeking out assistance in investing and managing that sum going forward.
This focus on a particular type of client allows boutique asset management firms to deliver more specialized services.
These firms can develop and offer specific services relevant to the collective profile of their clients. Similarly, they can encourage staff to develop knowledge and experience relevant to the needs of those clients. That ultimately means more targeted financial advice and guidance, which can more effectively support clients in reaching their goals and addressing their needs.
An Emphasis on a Personalized Experience
Larger firms in the investment management space focus on having a large volume of clients. That can lead to a cookie-cutter approach in the big picture of investment and wealth management.
That’s not to say such firms offer irrelevant or poor advice. Instead, it means that the guidance provided tends to be basic and broadly applicable.
That kind of guidance can help to build a good foundation in investing and wealth management. However, it often doesn’t go beyond that point.
Services may also be limited to a shallow, smaller range that is broadly applicable to a variety of clients. Again, these services aren’t somehow inherently inferior. The issue is the lack of more specialized offerings that can benefit certain clients.
Boutique firms take the opposite approach. By clearly defining their client base, these firms can tailor their guidance and services to those clients.
For example, Dechtman Wealth Management emphasizes tax reduction planning and strategies for our clients. Many advisory services only offer basic guidance in this area, if anything at all. Because what you keep is much more important in the long term than what you earn, we believe tax reduction strategies are especially valuable.
Boutique firms’ emphasis on quality over quantity can also mean building stronger client-advisor relationships. When a financial advisor has a strong understanding of each client’s preferences and goals, they can build strategies that better reflect those unique qualities.
In boutique terms, it’s similar to offering bespoke and made-to-measure clothing as opposed to ready-to-wear, off-the-rack items.
Focusing on Continuity
Working with the same investment management professional over time can offer some valuable benefits. It’s important to note that no firm can guarantee that its staff will always stay the same. However, the specialized, more focused nature of boutique firms can support a more stable team of professionals.
Continuity in planning and executing an investment management strategy is a clear advantage. So is building rapport with an investment manager. The longer a client and manager work together, the more likely they are to understand each other.
That continuity is especially important as circumstances change. Over time, many individuals and families will understandably change their risk tolerances and financial goals. An established relationship with an investment manager
Working with a smaller firm that is also a family business can help in this regard as well. Dechtman Wealth Management has family members who are also fiduciaries and experienced investment managers on staff. That helps us reduce turnover and provide consistent service.
Is Everyone a Good Fit for Boutique Investment Management Firms?
Many people can benefit from the approach to investment management used by boutique firms. That said, there are some specific cases where working with a different type of firm may make sense:
- You want to remain firmly in control of all investment decisions and aren’t particularly interested in professional guidance.
- You want to avoid the costs that come with professional investment management services.
- Your assets or investing preferences don’t align with the firm’s client profile.
Outside of these situations, you most likely can find a boutique investment management firm that’s a good fit for your goals and accumulated assets.
Finding the Right Boutique Investment Management Firm for You
Dechtman Wealth Management exemplifies the qualities of a boutique investment management firm by:
- Offering specialized services, such as investment management and tax reduction strategies, to our high-net-worth clients.
- Emphasizing low turnover supports continuity in client-advisor relationships.
- Prioritizing a high level of customer service and attention to detail.
Partnering with an investment management firm that prioritizes your specific financial goals can help you reach them. Schedule a free assessment today.
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