Money management is important for anyone, especially those who make a decent salary but aren’t financial experts. If you don’t manage your money correctly, you could find that all of your hard work during your career may not result in the blissful retirement you’d hoped for when you reach your golden years. Working with a financial advisor to manage your money and your investments can be the difference between a mediocre retirement and a magnificent retirement.
To make sure you achieve your financial goals, you’ll likely want to find someone to help you. Collectively, the types of professionals you are likely to hire fall under the broad category of financial advisor. There are two major services within this sphere, though: asset management and wealth management. Depending on your situation, you may need only one of these services or both. This guide delves into asset management vs. wealth management and looks at which service may be best for you.
What Is Asset Management?
Asset management is just what it sounds like: the management of your assets. Assets are all of your financial holdings, but asset management tends to focus on your investments. This includes stocks, bonds, mutual funds, ETFs and other investments you make to try to grow your wealth and prepare for the future.
An asset manager will determine which investments are the best-suited to your financial situation. This means they’ll help you with things like asset allocation, or choosing how to divide your investable assets among different asset classes. Namely, this entails determining what percentage of your portfolio should be growth products, like stocks, and what percentage should be fixed-income products, like bonds.
Asset managers generally earn money based on a percentage of assets under management. Rates will often be progressive and decrease the more money an asset manager oversees for an investor.
What Is Wealth Management?
While asset management focuses on investments, wealth management takes a much broader view. Wealth management is about looking at an individual or family’s overall financial situation and taking steps to maximize their wealth and protect it down the line.
This can take a number of forms and encompass a number of services. Services offered by a wealth manager may include:
- Tax planning
- Education planning
- Legacy planning
- Estate planning
- Charitable giving
- Retirement planning
While asset management is focused on growing an investor’s money, wealth management looks more holistically at a client’s overall financial situation and takes steps to ensure their wealth will be protected over the long run.
Wealth managers are also often paid through a percentage of assets under management, though some are paid a flat or hourly fee.
How to Find Wealth Management and Asset Management
There are a number of ways to find a wealth manager or an asset manager. The time-tested way is to get advice from a family member or friend. This type of endorsement certainly has its merits, but be careful: just because a wealth manager or asset manager is a good fit for one person doesn’t mean they’ll be the best choice for someone else. For instance, a lot of people inherit a manager from their parents, but this might not be the manager best suited to their situation. Your parents are naturally at a very different stage of their lives from you. Look for a financial advisor who specializes in serving clients with financial situations comparable to yours.
SmartAsset also has a free financial advisor matching service that makes it even easier to find an advisor. Simply answer a short series of questions about your financial situation and preferences and then our program will pair you with up to three advisors in your area.
Which Is Right for You?
Deciding whether you need asset management vs. wealth management ultimately depends on what your goals are and what services you need. If you only want help with investing, an asset manager is the right choice for you. An asset manager will help you find the best investment options for your portfolio and leave all of the other parts of your finances to you. If you want someone to help you set up your finances more holistically though, you’ll want to find a wealth manager. Wealth managers can help with everything from education planning to estate planning.
There’s a good chance you’ll need both types of services, and many financial advisor firms offer both wealth management and asset management. However, you may have to pay separate fees for both services. At other firms, you may pay a wrap fee that covers both services.
The Bottom Line
The question of asset management vs. wealth management comes down to what services you need. Asset management is about choosing and managing investments. Wealth management, on the other hand, looks more broadly at a person’s financial life and portfolio. Some financial advisors do both, allowing you to hire just one person for the job.
- If you’re looking for asset management or investment management services, SmartAsset can help you find a suitable financial advisor with our free financial advisor matching service. After you answer a few questions, we will match you with up to three financial advisors in your area. We have vetted all of the advisors on our platform to ensure they don’t have any relevant disclosures. Each of your matches will reach out to you to talk about working together. If you’re ready, get started now.
- Before you start working with an advisor, be sure you know how much their services will cost. Talk to your advisor about how their structure their fees and how much you can expect to pay.
Photo credit: ©iStock.com/pixelfit, ©iStock.com/Ridofranz, ©iStock.com/NicoElNino