When it comes to your finances, planning for the future may be difficult to do on your own. Professional help is available, though you’ll want to make sure you’re consulting the right expert for your needs. For instance, wealth managers are just one kind of financial advisor who work with a specific clientele: those with a high net worth. However, you don’t necessarily need to be wealthy to work with a wealth manager, so you may want to consider their services even if you don’t have much to invest. If you need help picking a wealth manager or financial advisor, consider using SmartAsset’s free matching tool to find options in your area.
What Is a Financial Advisor?
A financial advisor is an expert who helps clients with a wide range of financial services. Advisors typically provide financial planning and investment management. In some instances, advisors might only offer one or the other, though.
However, the term “financial advisor” is broad and doesn’t refer to one specific type of advisor. For example, a certified public accountant (CPA) is someone who has earned a certification to work with taxes and accounting. Meanwhile, a chartered life underwriter (CLU) is an expert in the subjects of life insurance and estate planning. In addition, a certified financial planner (CFP) focuses on building clients’ financial plans for their future goals.
Some advisors also work with particular clients, such as retirees or business owners. You can get an idea of what specialties an advisor has by looking at his or her certifications and licenses. Learn more about common advisory certifications here.
What Is a Wealth Manager?
Wealth managers are just a subset of financial advisors. The thing that sets them apart from other advisors is their clientele. Wealth managers primarily serve high-net-worth and ultra-high-net-worth individuals. And as the title implies, they usually manage large amounts of wealth for these clients.
Wealth managers work closely with their clients to offer a variety of services, rolled into one comprehensive, advisory package. Services include investment management, financial planning, tax services, retirement planning, legal planning, philanthropic planning and estate planning, among others. A client’s needs are the determining factor for which services a wealth manager will provide.
Many independent financial advisor firms offer wealth management in addition to their other services. You can also find wealth management services from banks and other big financial institutions. Some of the most prominent examples are Fisher Investments, Merrill Lynch, Edward Jones and J.P. Morgan.
The fees that you pay when you work with a wealth manager are similar to other financial advisor fees. Expect to pay a percentage of your assets under management (AUM). Many firms also charge additional fees for individual services or products. These other fees can come in hourly or fixed arrangements.
Do I Need a Wealth Manager or a Financial Advisor?
The kind of financial advisor you need depends on your individual situation. In general, you should consider a wealth manager if have a high net worth and want comprehensive management of your finances.
However, an important element to consider with a wealth manager, or any other financial advisor, is the minimum asset requirement for opening an account. Morgan Stanley Wealth Management, mentioned above, requires a minimum account size of up to $250,000 or higher. So even if you aren’t a millionaire, you can still work with this group.
Many other wealth managers also accept clients who aren’t super rich. So if your desire is to find an advisor who takes a holistic approach to your financial life, this could be perfect. At the same time, there are some advisors who are more selective. For example, some wealth management firms require a minimum of $1 million, $10 million or even more just to open an account.
If you mostly need a specific service, consider other specialized types of financial advisor. An advisor with a more general background, like a CFP, could also be a good fit. This is especially true if you’re just getting started with investing and need help with your initial planning.
Those who are just starting to invest may also want to consider a robo-advisor. A robo-advisor uses software to manage your portfolio digitally. You often don’t have the ability to talk with a human advisor, but they make up for that with lower fees than traditional advisors.
Financial advisors provide financial planning and investment management services for their clients. The term financial advisor is very general, though. One advisor may specialize in life insurance, while another focuses on estate planning.
A wealth manager is one kind of financial advisor who typically works with high-net-worth individuals. The services of a wealth manager are very hands-on and comprehensive, so that a client can work with just one advisor for all of his or her financial needs. All financial advisors, including wealth managers, set their own minimum requirements. In other words, how much you’ll need in order to work with a certain advisor will vary.
Tips for Choosing a Financial Advisor
- People who work with financial advisors report greater financial security. In fact, research suggests that working with an advisor can result in additional annual investment returns. To help you find local financial advisors, SmartAsset’s free tool matches you with advisors in your area in just five minutes. Get started now.
- After you narrow down your search to a few advisors, you should contact them to see which is best for you. In addition to their fees and account minimums, here are some questions to ask a financial advisor before you make a final decision.
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