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What Is a Wealth Manager?

SmartAsset: What Is a Wealth Manager?

A wealth manager is a subset of financial advisor that primarily offers high-net-worth and ultra-high-net-worth clients wealth management services. But a wealth manager’s role is far more comprehensive than just offering investment advice. They focus on a holistic suite of services that encompasses all parts of a person’s financial life. This can include investment management and financial planning, as well as accounting and tax services, retirement planning and estate planning. SmartAsset’s free tool can help you find a financial advisor who serves your area.

What Does a Wealth Manager Do?

As obvious as it sounds, wealth managers are in the business of wealth management. This is a set of services that combines several areas of personal finance into a single comprehensive package that’s designed to address the entirety of an individual’s financial life. In the end, the goal of wealth management is to grow and preserve wealth over the long term.

Every wealth manager and wealth management firm has its own set of financial services and specialties. These can cover a vast range of topics, which will give you the ability to select the manager that’s best suited to your needs. Here’s a breakdown of some of the more common offerings you’ll come across:

  • Investment advice and portfolio management
  • General long-term financial planning
  • Tax planning
  • Charitable giving or philathropic planning
  • Estate planning
  • Trust services
  • Strategic tax planning
  • Family legacy planning
  • Philanthropic planning
  • Risk management and insurance planning
  • Retirement planning
  • Legal planning
  • Banking services

Additionally, a wealth manager may serve as the central point of contact for a client. This involves coordinating communications and relationships with their various financial experts, such as an attorney, accountant or insurance agent.

Who Typically Works With a Wealth Manager?

SmartAsset: What Is a Wealth Manager?

Wealth managers primarily serve affluent clients who have large amounts of investable assets. These clients are typically referred to as high-net-worth or ultra-high-net-worth individuals. For reference, the U.S. Securities and Exchange Commission (SEC) defines a high-net-worth individual as someone who has at least $750,000 in assets under management (AUM) or has a net worth of $1.5 million or more.

Wealth managers usually require prospective clients to have a certain amount of investable assets before they’ll agree to work with them. Account minimums vary wildly from firm to firm. However, they can often be anywhere from $5,000 all the way up to millions of dollars.

What Fees Do Wealth Managers Charge?

Like most financial advisors, wealth managers often charge clients using a set annual fee schedule. In most cases, these advisory fees are based on a percentage of the client’s overall AUM. Fee rates usually come in somewhere around 1%, though they can vary higher or lower than that as well. Clients with higher AUM levels may have lower fee rates.

Other wealth managers may charge fixed fees, hourly fees or some combination of the two. However, even if your wealth manager only charges a percentage of AUM, you may be paying more than just that. Percentage fees don’t account for the underlying expenses associated with brokerage services, funds and trading. The only exception to this is if the wealth manager uses a wrap fee program, which involves bundling all expenses into a single annual rate.

How to Choose a Wealth Manager

Choosing a wealth manager is a similar process to picking a financial advisor. One of the first things to take note of is a wealth manager’s account minimum. This is often an indication of whether or not the advisor is a realistic option for you. Also, ask each wealth manager about their typical client base to get an idea of who they usually work with.

Furthermore, a wealth manager’s advisory certifications can demonstrate experience in a certain areas, like financial planning. You should also review a wealth manager’s fees to get an idea of how much their services will cost you. Note whether they sell any third-party products for a commission, and if he or she is a fiduciary.

A good resource to look through is the firm’s Form ADV. All registered investment advisors (RIAs) file this document with the U.S. Securities and Exchange Commission (SEC) or a state securities authority. The Form ADV provides information on any of the firm’s past disciplinary issues, its client base and services and more.

Comparing Wealth Managers With Other Advisors

SmartAsset: What Is a Wealth Manager?

Since wealth managers are just one type of financial advisor, the financial advisor space would be a logical place to look for another option. Some common alternatives to a wealth manager are investment advisors, financial planners and financial consultants.

While each of these financial advisor categories differ in their specialties, they usually focus on a specific area of your financial situation. Conversely, wealth managers look at the full picture and manage all of your money holistically.

Like a financial planner, a wealth manager can help clients identify their objectives and map out a financial plan to achieve them. Unlike wealth managers, who typically help wealthy clients with more complex financial situations, financial planners serve many types of clients who have more generic needs.

Similar to investment advisors, a wealth manager can help clients select an investment strategy for their portfolios within appropriate asset allocations. While investment advisors zero in on this particular aspect, wealth managers also look at a client’s overall financial picture and provide financial planning and relationship management in conjunction with investment services.

Bottom Line

If you’re an affluent individual and have many aspects of your financial life that you need help managing, the services of a wealth manager would likely be very beneficial. Because they tend to work with financially complex clients, they often have more expertise and experience than a typical, base-level financial advisor. But if you have specific financial planning or investment needs, a financial planner or investment advisor, respectively, might be better choices.

Tips for Finding a Wealth Manager

  • Financial advisors and wealth managers alike can be great partners for anyone looking to get their financial life in order. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have free introductory calls 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.
  • When picking a financial advisor or wealth manager, make sure they abide by fiduciary duty. This ensures that they will act in your best interest, no matter what. In addition, it could be valuable to figure out if a firm you’re looking at is fee-based or fee-only.
  • Consider what purpose you’d like your financial advisor to serve. For instance, if you need help figuring out how much to save for retirement, go with an advisor who has experience in that area and a relevant certification.

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