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10 Questions to Ask When Choosing a Wealth Manager in Omaha
February 8, 2023
Tom Sudyka, Partner and Portfolio Manager
Adam Yale, Partner and Portfolio Manager

Do you need help managing your wealth?

The answer depends on many factors, including how complicated your finances are, how comfortable you manage money, and where you are in your life stage. Investing can be hard. Many high-net-worth investors are often too busy and lack the experience to invest the wealth they have earned and accumulated personally.

Some investors can do it themselves. Others are better off hiring a wealth manager. A wealth manager can help you determine your financial goals, build a comprehensive plan, work through challenging markets and news, transition an inheritance, help transfer your wealth to the next generation, and help you deal with opportunistic financial questions. They also keep up with ever-changing regulatory issues and developments.

For those who decide to seek expert investment advice, there are approximately 2,200 investment professionals from 485 firms in Omaha alone. Ninety-seven firms are headquartered in Omaha to provide a personal touch.

Some firms and individuals call themselves financial planners, financial advisors, registered representatives, wealth managers, or investment managers. Some are comprehensive planners, others focus on investment management, while others are hybrid. Firms may include large national branded wire-houses, regional broker/dealers, national and local bank trust departments, insurance companies, and local independent Registered Investment Advisors. Some charge a percentage of fees while others charge commissions on products.

The cluttered landscape and nomenclature can be confusing.

How do you narrow down the choice? Researching options and choosing the right wealth manager is one of the most critical investment decisions you will make.

Certain traits and qualities critical to a trusted advisory relationship are true differentiators. Knowing what those are and how to uncover them with the right questions is your surest path to finding a great fit. Here are 10 questions individuals and families should ask when selecting a long-term partner:

1. Do you work with all investors?

Many large wealth management firms work with all different kinds of investors. These experienced and broad-based firms may do well for many of their clients. They cast a wide prospecting net through cold calls and big advertising budgets. Their investment minimums may be as low as $1,000.

By contrast, many firms prefer to work with investors who have a substantial amount of investible assets. For Lawson Kroeker, this means $500,000; for those who work with ultra-high net worth investors, the minimum might be $5 million. These wealth managers may get a majority of new clients, not through advertising and cold calls, but through referrals from trusted local sources such as attorneys and CPAs.

Lawson Kroeker believes that investors receive better experiences when being part of a select client base. We have an exclusive set of valued clients with whom we provide focused, unhurried service. By being selective, we can connect with clients on a personal level. We know we can’t work with everyone and provide great service to all.

As an investor, you’ll need to determine the best fit—generalist or specialist—for you.

2. How do I know that you put my interests first?

Most wealth managers will tell you that they work with their client’s best interests in mind. However, the only type of advisor who is obligated and willing to put client’s interests first is a fiduciary.

By law, fiduciaries must put an investor’s interests ahead of their own. It is the highest standard for wealth managers.

Many managers work under the “best interest standard,” not as a fiduciary. The best interest standard means that managers must make suitable investment recommendations for their clients. The key difference is that the fiduciary obligation applies to the entirety of an advisor’s relationship with a client. The best interest standard applies only at the time of a specific recommendation.

We believe the fiduciary standard is superior because it pertains to every aspect of a client’s relationship with a wealth manager. Investors should consider an advisor who always puts client interests first.

3. How will you communicate with me?

One of the main reasons clients leave their current manager—if they have one—is due to poor communication. Managers who are not afraid to be open and transparent, particularly when the market or news is negative, tend to be the most trusted.

You should know the methods and frequency of client communications, including client reviews, portfolio updates, and routine client contacts. You need to know how often you can expect to speak on the phone (or via Zoom, email or text) and what to expect in response time.

Any wealth manager, Lawson Kroeker included, should make investors feel comfortable in their interactions. They should be able to explain often challenging investment concepts in a way the investor can understand. A good wealth manager understands that he or she should not dominate a conversation, and that client questions are important.

4. What is your investment strategy?

Your wealth manager’s investment strategy should align with your temperament and goals.

Many firms offer a spectrum of investment strategies, objectives and styles which may offer a good fit for many investors. The investment strategy of other wealth managers may be more selective, such as those who invest aggressively in a few securities for long-term growth. If you are an investor primarily seeking monthly income, this may be a mismatch.

Lawson Kroeker specializes in investing in helping families grow and protect your capital. We do this by selecting a small set of carefully researched stocks or bonds for growth and capital preservation, employing a tax-aware, business fundamentals-based investment style.

5. How do you incorporate tax and estate planning, and philanthropic efforts into your services?

You should know if a wealth manager has the in-house expertise or access to expert resources across various investment disciplines, including tax, estate, business, and retirement planning. Do they collaborate with other experts such as attorneys and CPAs, or do they rely on their own capacity to address these issues?

Decreasing and/or deferring taxes, and distributing accumulated wealth to adult children are major priorities for many Lawson Kroeker clients. Hiring a wealth manager with tax and estate planning experience can make a difference in building wealth. Investors should not pay taxes unnecessarily.

6. Do you manage my money yourselves in Omaha or is it outsourced?

Some Omaha-based wealth managers may not make all investment decisions for your portfolio by themselves. Rather, they outsource their buy and sell decisions to experienced mutual fund money managers based in New York, Chicago, or elsewhere. There is nothing inherently wrong with this.

However, those recommendations may be less responsive to your individual investment needs. Model portfolios have become popular on Wall Street, because they allow advisors to work with multiple clients without spending much time with any. This outsourcing will also create additional fees for you.

Lawson Kroeker’s investment management team manages money here in Omaha.

7. Can you clearly explain your fees?

Many advisors charge a fee based on assets under management. That means the advisor gets a percentage of client assets as their fee. This aligns the goals of the advisor with the investor. The advisor gets paid more only if they grow client assets. For example, for clients with a $1,000,000 investment account in which the advisor charges one percent of assets, the client’s yearly fee would be $10,000. The fee isn’t always transparent because it comes directly out of the client’s investment balance, not from their bank account.

In addition to the assets under management fee, advisors may invest client dollars in mutual funds, annuities, insurance, or other products managed by outside managers that also charge underlying fees. That’s an additional yearly fee. For example, let’s say an advisor who charges a one percent fee and also invests client assets in mutual funds with an average fee of 0.75 percent. The fee on that same $1,000,000 portfolio would be $17,500—$7,500 higher. Note that this investment fee is paid to the outside manager, not to your local wealth manager.

Lawson Kroeker manages money directly, without the use of outside managers. Investors therefore typically pay competitive fees. This may also correlate to higher returns over the long-term.

8. If you leave the firm where does my money go?

Hiring a manager who is part of a larger firm or investment team may provide a relatively seamless experience if your wealth manager retires, moves to another firm, or dies. If one manager leaves the firm other members may easily move forward with that strategy. On the other hand, some individual advisors may frequently move from one broker/dealer or RIA to another, with little long-term commitment to their firm, and possibly to you.
By contrast, when a wealth manager owns all or part or his or her firm, that manager is more likely to have a succession plan in place. The succession plan could involve other managers already affiliated with the firm with a similar philosophy.

Lawson Kroeker, now in its third generation of operation, is 100% employee owned and operated in Omaha. Our investment management depth provides continuity and consistency in managing portfolios and providing superior customer service over the long-term.

9. How involved are you in philanthropic efforts in Omaha?

In addition to managing money in Omaha, you may want to ask if your potential wealth manager participates in local philanthropic efforts. Do they help contribute to financial literacy, the arts, education, sports, and religious organizations, with either time or money? How long have they done so?

The Lawson Kroeker team is deeply dedicated to Omaha. We have historically supported community groups and philanthropic efforts in and around Omaha. Commitments, both in time and financially, have included the Archdiocese of Omaha, Creighton Heider College of Business, Jewish Federation of Omaha, Methodist Health Systems, Omaha Public Schools Facility Task Forces, and St. Cecilia Cathedral Educational Endowment.

10. Can you provide references?

Doing a thorough background check is essential to narrowing a search for the right investment partner.

Wise investors ask potential wealth managers for references from their current clients with whom they’ve had a long-term relationship. How has the manager provided advice that integrates well with other clients’ needs and wants?

Final Thoughts

The more you understand your investment goals, and what you want in an advisory relationship, the more prepared you can be with the right questions. When you don’t know what you hope to achieve, a great wealth manager will facilitate the conversation by asking thoughtful questions and then sitting back to listen.

You should also ask questions of yourself. For example, can you genuinely entrust your financial legacy with an advisor? Would you gain value—knowledge, insight, perspective—from a relationship with someone you wouldn’t obtain from another? Has the advisor made you feel comfortable in all interactions? Does the advisor explain things to educate, or to only demonstrate how much he or she knows?

The answers to these questions—of potential wealth managers, and of yourself—are vital for investors when determining the best partner to work with.

About Lawson Kroeker

Lawson Kroeker Investment Management, founded in Omaha, Nebraska, is a third-generation wealth management firm that helps a select group of high-net-worth clients achieve their life goals by providing investment advice and building custom solutions. Lawson Kroeker’s disciplined, patient investment management process focuses on owning the stocks and /or bonds of a focused group of individual businesses. Established in 1986, the firm has under management approximately $600 million in assets.

Tom Sudyka, Jr. CPA, Partner and Portfolio Manager—Mr. Sudyka began his career as a portfolio manager with several large Midwest-based investment management companies. He served as a managing director and founding partner of BPI Global Asset Management before joining Lawson Kroeker in 1999. His investment decisions are guided by his 30+ years of investment management experience. He has an M.B.A. in Finance from the University of Nebraska and a B.A. in Finance from Creighton University.

Adam Yale, Partner and Portfolio Manager—Mr. Yale started his investment career in 1997 with First Manhattan Co., an investment advisory firm in New York, NY as an analyst of publicly-traded real estate securities and direct real estate investments. From 2006 until the 2022 merger with Lawson Kroeker, Adam was the sole Principal at Red Cedar Capital, LLC, a Registered Investment Advisory firm he founded that employed a fundamentals-based investing strategy. He earned a B.A from the University of Michigan and a Master’s in Accountancy from the University of Denver.