Wealth management is a set of financial planning services tailored to affluent clients with a high net worth. Wealth management advisors provide a range of services, including financial, investment and legal advice, along with accounting and tax services and retirement and estate planning.
Wealth management can be helpful for affluent individuals who need extra advice and diligence in managing large amounts of assets.
This can be especially true for high net worth individuals, which the U.S. Securities and Exchange Commission defines as someone with $750,000 in assets under management or $1.5 million total net worth.
Is Wealth Management Right for You?
Wealth management is best suited to people who are already affluent. Some firms may require a minimum investment of $250,000 to $10 million.
But as you build wealth over your lifetime, wealth management may become a better option than your current financial planning or investment options. A wealth management advisor can tailor investment planning and strategies to help you manage your assets.
Wealth Advisor vs. Financial Advisor
Financial advisor is a broad term that applies to different types of financial services. Certified public accountants, for instance, specialize in taxes and accounting. Other financial advisors may specialize in life insurance, stock investments or estate planning.
People who may not have enough wealth to open a wealth management account may still benefit from specific forms of financial advisors.
Wealth advisors are a specific type of financial advisor that specialize in helping affluent individuals manage their assets. Their firms bundle several financial and asset management services together. They may offer financial, retirement and estate planning along with legal and tax advice, among other services.
Private Wealth Management
Private wealth management provides a wide range of financial services and products to individual clients, as opposed to corporations or other institutional investors.
Affluent clients generally require more investment and asset management than typical financial advisors can provide. They frequently require more vigorous and active management of their financial interests than people with less wealth.
Private wealth management firms can address this need by bundling services and bringing together expertise on a wide range of financial issues.
The exact bundle of products and services wealth managers provide vary from firm to firm. You may want to consider what services are most important to you.
- Estate and Family Legacy Planning
- Making a plan for how your wealth will be distributed after your death.
- Insurance Planning
- Determining the types and amount of insurance you need to protect your assets.
- Investing Advice and Management
- Providing professional advice on which securities to invest in and strategies to follow.
- Legal Planning, Advice or Services
- Advice on complying with tax laws affecting your assets and investments, setting up estate planning, trusts, philanthropic gifts and related planning, and representing you in lawsuits and legal resolution of disputes.
- Philanthropic Planning
- Advising you on large-scale charitable gifts to worthy causes.
- Private Banking Services
- These are banking services designed to protect and maintain your assets.
- Retirement Planning
- Helping you determine your retirement income goals and planning a strategy to achieve them.
- Risk Management
- Forecasting and evaluating your financial risks and planning how to identify, avoid or minimize those risks.
- Tax Planning and Services
- Analyzing your financial situation from a tax perspective to ensure the greatest tax efficiency, meaning you do not overpay your taxes.
Wealth management firms and advisors customize these services to individual clients. This can be helpful in major life events for the client from health care and Social Security benefits to help starting or selling a business.
How to Choose a Wealth Management Firm
Choosing a wealth management firm requires you to consider how well your needs and goals fit with the experience and services of the firms you are considering.
You will want to find a firm that gives you the best value for the fees you are paying. There are some specific things everyone should consider before deciding on a wealth management firm.
What to Consider When Choosing a Wealth Manager
- Take in account the wealth manager’s minimum net worth requirement. This can let you know immediately if the firm is a realistic option for you.
- Ask for the manager’s advisory certifications to determine the firm’s experience levels in areas such as accounting, financial planning or other areas related to your specific goals.
- Compare the wealth manager’s fees with other firms.
- Look up the manager’s Form ADV on file at the Securities and Exchange Commission’s Investment Adviser Public Disclosure website.
- Make sure the wealth manager abides by fiduciary duty — meaning they follow legal and ethical requirements to act in your best interest.
- Know whether the firm is fee-only (all their income comes from a percentage of your assets they manage) or fee-based, meaning they will charge extra hourly or performance-based fees on top of their percentage.
- Consider how the wealth manager’s package of services fits with your primary concerns for wealth management. For example, if retirement planning is your top priority, make sure it’s a leading service of the firm.
You may also want to consider their track record and make sure they are available to discuss your needs or answer your questions if you choose the firm.
3 Cited Research Articles
- Chamberlain, M. (2018, April 20). What Is Wealth Management? A Definition That Works for Everyone. Retrieved from https://www.forbes.com/sites/feeonlyplanner/2018/04/20/what-is-wealth-management-a-definition-that-works-for-everyone/#6787a3692dfb
- Prince, R.A. (2014, May 16). What Is Wealth Management? Retrieved from https://www.forbes.com/sites/russalanprince/2014/05/16/what-is-wealth-management/#458765e5133e
- U.S. Securities and Exchange Commission. (2011, Mach 11). Form ADV. Retrieved from https://www.sec.gov/fast-answers/answersformadvhtm.html