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What Is a Wealth Manager?

A wealth manager can help you preserve and grow your fortune. Discover why they’re important and how they work.

Being wealthy is often liberating and brings plenty of opportunity. But it can also be time-consuming and stressful. To some, managing money may even seem like a full-time job!

If your money is becoming too much for one person to handle, you may benefit from hiring a private wealth manager. These are financial advisors who help you effectively manage your fortune, so you can conserve and grow what you already have. In this article, we’ll teach you about what they do, why they’re important, who needs the service, and how to find one.

What a Wealth Manager Does

Wealth managers specialize in assisting affluent and high-net-worth individuals to conserve, invest, and build their existing finances. After in-depth consultations and discussions, they will help you come up with a plan for your money. Then, they’ll work with you to put your short- and long-term plans into action.

The bigger your portfolio, the harder it is to handle. For instance, you may want help lowering your tax burden. Or perhaps you need assistance creating an estate that distributes your money how you want. Whatever financial problems you face, hiring a pro can help take the weight off of your shoulders.

Wealth management encompasses a wide array of financial services, such as:

  • Investment management and advice. An expert can work with you to pick shrewd investments that allow you to grow your wealth.
  • Estate planning. With a lot of assets, you may want to ensure its fate in the event of your incapacitation or death. A wealth manager can help you distribute your assets according to your wishes.
  • Tax planning and accounting. The rich often deal with heavy taxes. An expert may be able to help lessen how much you pay or find deductions you didn’t even know existed.
  • Retirement planning. With your current assets, you may be thinking ahead to retirement. A professional will work with you to identify when you can retire and build a plan toward that.
  • Real estate. An expert can help you effectively manage and grow your real estate portfolio, whether it be via properties or real estate investment trusts (REITs).

Wealth Management Strategies

Once you hire a professional to manage your wealth, they will begin to work with you to build a strategy for your money. The strategy should focus on the objectives you have, as well as your current financial situation. For instance, someone with $2M in assets may have different goals than one with over $10M.

Your risk tolerance is also of major concern. Depending on your financial situation, they may suggest varying types of investments. For instance, a younger person may be able to take on riskier investments than somebody who is of retirement age.

Often, when people think of wealth management, investments come to mind. But the job involves much more. Their strategy for your finances will include all aspects of your wants and needs, including investments, estate planning, taxes, and more.

After a strategy or plan is in place, you’ll likely have regular visits with your advisor. At these appointments, you can evaluate your progress and discuss changing course if something doesn’t seem right.

Who Needs a Wealth Manager

Contrary to a standard financial advisor, wealth managers are for very specific types of clients. In general, you should be in the affluent or high net-worth categories. However, these terms are arbitrary and the minimum assets you need may vary. For instance, Charles Schwab requires a minimum investment of at least $1M, while Fidelity needs at least $2M.

If your assets don’t meet the minimum requirement, but you still struggle to manage your money, you can always hire a normal financial advisor. These professionals should be able to help you with all of your needs, but at a smaller scale.

Why Wealth Management Is Important

Having substantial assets provides unique challenges that can often be overwhelming and complex. A typical financial advisor or planner may be able to assist with overcoming any issues, but this may not be their main area of expertise. With a wealth manager, you’ll get someone with experience taking care of high-net-worth individuals.

An expert can help you address important tasks, like philanthropy, lessening taxes, managing business income, and more. Or, if you want to expand your investment portfolio, they’ll be able to strategize how you can leverage your vast resources to do so in a smart way.

At the end of the day, it’s a tall task to handle such large quantities of money on your own or with someone less experienced. Hiring a wealth manager can give you invaluable peace of mind and help you avoid crucial mistakes.

How to Find a Wealth Manager

There are plenty of private wealth management services out there, but how do you know which one is right for you? You’ll need to consider important factors, such as qualifications, cost, and proximity. Plus, some have steep asset requirements to work with them.

Here’s a breakdown of what you should consider before selecting a professional:

Qualifications You Should Look For

It’s important to find a financial professional who’s qualified. Before you select an advisor to work with, you’ll want to personally vet their credentials. Wealth managers typically have one or both of these:

  • Investment advisor representative (IAR). IARs are professionals who give you advice or recommendations regarding investments you make. They are typically registered with the U.S. Securities and Exchange Commission. You can use the SEC’s search tool to see if they’re registered.
  • Certified financial planner (CFP). These are individuals certified by the CFP board. They must pass a rigorous exam, obtain the proper education, and gain plenty of experience to do so. You can verify a prospect’s status using the CFP board’s tool.

Wealth managers with the above credentials are also fiduciaries. This means they’ll put your needs above their own and avoid conflicts of interest. You can also expect them to charge a fee, rather than a commission based on products or investments you buy.

How Much One Costs

The cost to hire a wealth manager can vary, especially depending on your net worth. Reputable experts should charge you on a fee-only basis. With this structure, you’ll typically need to pay a percentage of your assets under management (AUM).

Fee percentages vary depending on the financial advisor. As an example, Fidelity charges 0.20% to 1.04% of AUM. Charles Schwab, on the other hand, charges a more expensive starting fee of 0.80% of AUM.

During your search for a wealth advisor, you should weigh a few different options. It may be helpful to use a financial advisor matching tool. This will match you with up to three vetted experts near you.

Difference Between Wealth Managers and Financial Advisors

If you’re looking for help with your funds, you may see these labels and wonder how they differ. Financial advising refers to a broad range of services, which includes the latter. Wealth management, on the other hand, is the particular practice of handling an affluent or high-net-worth person’s money.

So, if you want someone qualified to take care of a substantial portfolio, those advertising themselves as being a financial advisor may be what you need. Look out for terms like “private wealth management” as a service. Ultimately, you want someone experienced with managing substantial assets.

Also, note that commission-based advisors typically aren’t fiduciaries and won’t have much in the way of credentials. These are often broker-dealers, who make their money by recommending certain financial products or investments that may benefit them, not just you.

Frequently Asked Questions

How much money do I need for a wealth manager?

These types of advisors are generally for affluent or high-net-worth individuals. However, the amount you need to hire one can vary. In general, you’ll need around $2M to $5M to get started. However, some may offer their services if you have less.

How do wealth managers get paid?

They typically make money by taking a percentage of your assets under management (AUM). The fee percentage often goes down if they’re managing more for you.

Is it worth paying someone to manage your wealth?

This depends entirely on your financial situation. If you’re finding it difficult to handle your funds, you’ll definitely want to consider employing one. They can take the lead on tax and estate planning, investment management, and more. However, if you’re comfortable going it alone, then a wealth manager may not be for you.

In the end, having more money can leave room for mistakes to occur. Having an expert on your side helps you ensure everything is done correctly.

Are wealth managers fiduciaries?

Not always. A wealth manager who is an IAR or CFP is a fiduciary. However, a broker-dealer that makes a commission from investments you make is not. Be sure to pay close attention to a prospect’s credentials. Working with someone who isn’t a fiduciary means they may not have your best interest in mind.

What is considered a high net worth?

High-net-worth individuals are generally those with assets over $1M. However, this may not be enough to hire certain wealth managers. Some require as much as $2M to start working with them.