Wealth managers provide services to wealthy individuals to manage their finances, including financial planning, investment advice, and tax advice. They may also assist clients in creating an estate plan.
Wealth management strategies must be tailored to individual goals and risk tolerance. Strategies may include tax loss harvesting or asset allocation.
Table of Contents
What is Wealth Management?
Wealth management services cater to individuals with significant financial assets such as investments, real estate, or luxury vehicles. A wealth manager will assist in overseeing all your assets and working alongside professionals such as accountants and estate managers to develop an overall financial plan aligned with your goals and protect or increase wealth over time. Wealth management aims to safeguard one’s net worth over time.
Wealth managers provide services ranging from investment management and estate planning to charitable giving. They are typically more comprehensive than typical financial advisors regarding investable assets or net worth minimums.
Wealth management advisors usually begin by listening and asking questions to ascertain your desired goals, also known as your destination. From there, they develop a financial strategy to help reach these destinations – this might include retirement planning, tax services, or business succession plans with other professionals such as insurance providers or attorneys as necessary.
Financial planners and wealth managers differ because wealth managers typically focus on assets and investments. In contrast, planners take a broader approach that includes expenses, debt repayment plans, insurance needs, and other aspects of your finances. Suppose you think a wealth management service could benefit your finances. In that case, SmartAsset’s free matching tool can connect you with local advisors who meet your specific requirements – answer a few simple questions to be matched up with advisors near you who will meet those needs.
What is a Wealth Manager?
Wealth managers offer services ranging from estate planning and tax advice for business income to set up donor-advised charitable contributions funds. Furthermore, wealth managers will assist you in planning for any unforeseen expenses or health issues which might arise along with market volatility.
Wealth managers offer invaluable expertise to those with significant assets, typically those worth at least $2 million in investable assets or $5 million net worth or higher. A good rule of thumb would be for clients to have at least this much in investable assets to warrant using one.
Wealth management strategies may vary by advisor; however, most will include such techniques as diversification and rebalancing as part of an investment portfolio management approach. Tax-loss harvesting entails selling investments that have experienced losses to offset capital gains taxes more efficiently.
Wealth managers offer services beyond investment advice, such as private banking, trust services, and retirement planning. In addition to investment advice, wealth managers also liaise with you and other professionals such as attorneys or accountants. They can organize various aspects of your finances into an all-inclusive plan.
Wealth managers may charge a flat fee, hourly rate, or percentage of assets under management (AUM). Most firms have different fees associated with different services, so it is essential that before hiring one, it is known what their fee structure entails.
If you feel confident managing your finances and need guidance in specific areas, a wealth manager may not be necessary. Instead, fee-based financial planners or investment advisors could be more suitable. You could use SmartAsset’s financial advisor matching tool to find local advisors who meet these criteria.
What is a Financial Advisor?
Financial advisors are professionals who help their clients manage their money. This may involve advice on investment, retirement planning, estate and tax, and taxation matters. Many advisors hold accounting, finance, and business degrees and may possess certifications such as Certified Financial Planner (CFP) and Chartered Financial Analyst (CFA).
A great financial advisor should take the time to get to know you and your goals before explaining complex topics in simple language that is easy for anyone to comprehend – which is especially crucial given that finance jargon can often be challenging to decipher. Furthermore, an ideal advisor will always be open about their earnings methods and ready to answer any queries from clients regarding them or any specific situations they face.
Some financial advisors receive a flat fee for their services, while others may earn a commission on any products they recommend to you. It is essential to understand how a particular advisor makes money so you can ensure they have your best interests at heart rather than simply selling something quickly to turn a quick profit.
Wealth managers specialize in working with wealthy individuals and families to grow their assets while managing finances more efficiently. Working in coordination with other professionals, wealth managers often develop holistic wealth plans that cover every aspect of a client’s financial picture – for instance, collaborating with an accountant to address all tax considerations effectively.
Before choosing a financial advisor, meeting with several potential candidates and comparing services is wise. Ask each advisor about their experience and education while discussing fees – this way, you’ll know whether their incentives align with those of you they promise they can deliver on.
What is a Financial Planner?
Financial planners are hired to assist with a range of money-related tasks. This may include investments, estate planning, education funding for children, taxes, insurance, and personal cash management advice – and could specialize in just one or more. Financial planners may be held to a fiduciary standard which requires them to put your interests before their own and explain complex investments clearly to clients in ways they understand. In addition, they often liaise with other professionals, such as tax experts or attorneys, whom they might recommend working with directly.
Wealth managers typically employ a consultative process to gather information about your goals and individual circumstances, then devise a holistic plan tailored to reaching those goals. They might recommend specific securities, investment products such as exchange-traded or private equity funds, or strategies like tax loss harvesting to minimize capital gains taxes.
As you consider whether a wealthy manager is right for you, remember that many firms require significant minimum account balances before joining their service. Suppose these fees prove prohibitively expensive for you. In that case, hiring a financial planner or another expert who can help you reach your financial goals more cost-effectively may be more economical and time-efficient.
Use an online service like SmartAsset’s free quiz to match with advisors who tailor recommendations specifically to your needs. Or search the FINRA BrokerCheck or SEC Investment Advisor Public Disclosure database and look up potential financial planners – but make sure they possess licenses and expertise before hiring them.
What is a Financial Planner for You?
Financial planners help you formulate an action plan within your overall financial plan that aligns with your goals, helping to achieve them more easily. They offer guidance in retirement planning, college savings, and estate planning. Financial advisors typically possess an in-depth knowledge of the industry and connections to specialists for specific services such as taxes or life insurance policies.
Wealth management firms work with wealthy clients who comprise the top one to three percent of U.S. households by income, such as individuals with assets of $250,000 to $10 million or more. Such clients tend to have complex needs that an ordinary financial advisor cannot fulfill.
Financial professionals can meet these needs with services such as tax advice, insurance recommendations, and advanced investing strategies. Wealth managers may collaborate with other experts to develop an all-encompassing wealth plan tailored to you and your finances.
Some financial advisors specialize in wealth management, while others cater to individuals with more varied financial needs, offering financial planning for less expensive minimum investment amounts than wealth management firms. Vanguard even offers personal wealth management for investors with $5 million or more investable assets, offering access to a team of financial experts and an appointed CFP.
A wealth manager isn’t necessarily necessary if you feel confident managing your investments. But if your investable assets surpass $250,000 or you need help with tax planning or wealth transfer services, it may be worthwhile exploring financial planners’ services as an option.
