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Managing your money involves setting goals, organizing your finances and deciding how to use your resources over time. Wealth management and financial planning both support these decisions, but they serve different roles and are often used at different stages of wealth. They also differ in scope, cost structure and the level of ongoing involvement they provide. A financial advisor may work with you to determine which type of service aligns with your financial situation and the level of complexity involved.
How Wealth Management Works
Wealth management is a comprehensive service that combines financial planning, investment management and other financial services to help clients grow, protect and transfer wealth. It’s designed for individuals or families with significant assets who need an integrated approach to managing their finances. Rather than focusing on one financial goal, like retirement or college savings, wealth management takes a holistic view of your full financial picture, often coordinating multiple strategies at the same time.
A core component of wealth management is investment management. Wealth managers develop diversified portfolios based on your financial goals, time horizon and tolerance for risk. They may employ active management, making frequent trades and adjustments, or take a more passive approach that relies on broad market exposure. In either case, the investment strategy is part of a broader plan that considers how each asset supports your overall financial health, including tax efficiency and liquidity needs
How Much Wealth Management Costs
Wealth management fees vary widely, but most firms charge based on a percentage of assets under management (AUM). The industry average typically falls around 1% annually 1 . So, for example, if you have a $1 million portfolio, you might pay about $10,000 per year in fees. However, the rate often decreases as your portfolio grows, a structure known as a “tiered” or “breakpoint” fee schedule, which reduces the marginal cost on higher balances.
Some wealth managers offer flat fees, hourly rates or performance-based pricing instead of the traditional AUM model. Flat or retainer fees can appeal to clients who prefer predictable costs. Performance-based fees tie compensation to portfolio results, though these arrangements are less common and subject to regulatory limits.
How Financial Planning Works
Financial planning focuses on creating a roadmap to achieve your financial goals, whether that means saving for retirement, buying a home, paying for college or managing debt. Unlike wealth management, which targets complex, high-asset situations, financial planning is accessible to a broader range of people and centers on your overall financial health. A financial planner works with you to understand your income, expenses, assets and liabilities, then translates that information into a structured plan.
The financial planning process starts with identifying your goals and assessing your current financial picture. From there, your planner develops a detailed plan that includes both short- and long-term strategies. For example, they might recommend a savings target for retirement, an emergency fund amount to reach or the right mix of investments based on your risk tolerance. Once the plan is set, they’ll help you put it into action and track your progress over time, make adjustments as life events occur or priorities shift.
How Much Financial Planning Costs
The cost of financial planning depends largely on the scope of services provided and the advisor’s experience. Many planners charge a flat fee for a comprehensive plan. This can range from $1,000 to $5,000 or more, depending on the complexity of your situation. Others bill hourly for specific guidance, typically between $150 and $400 per hour, such as cash-flow analysis or retirement projections.
Some financial planners offer subscription-style or retainer pricing. For a recurring fee, typically between $100 and $300 per month, clients receive ongoing access, periodic plan updates and continued guidance. This model is often used by clients who want regular check-ins rather than a one-time plan.
How to Choose Between Wealth Managers and Financial Planners
Choosing between a wealth manager and a financial planner depends on the complexity of your finances and the type of support you need. Financial planners focus on goal-setting and financial organization, while wealth managers coordinate investment management with tax, estate and legacy considerations.
If you are still building wealth, a financial planner can help establish structure and priorities. As assets grow and planning needs become more interconnected, some individuals transition to wealth management for broader oversight. Wealth managers often work alongside tax and legal professionals, providing a centralized approach to managing more complex financial arrangements.
Bottom Line
Wealth management and financial planning address different financial needs. Financial planning focuses on setting goals and creating a framework for saving, investing and managing money. Wealth management takes a broader, ongoing approach that often includes investment management and coordination across taxes and estates for clients with more complex finances.
Financial Planning Tips
- A financial advisor can help you create a financial plan to reach different goals. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- If you want to diversify your portfolio, here’s a roundup of 13 investments to consider.
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