Many people hear the term “wealth management” and assume it refers to a financial advisor or investment advisor who manages your investment portfolio. In fact, wealth management is a comprehensive service that spans investment management, financial planning, taxes, and estate planning. It aims to take a comprehensive look at your financial life and create a unique plan to grow and protect your wealth.
If you have investable assets, you might benefit from working with a wealth manager to implement strategies to help safeguard your future, achieve your financial goals, and preserve your legacy.
What is wealth management?
Wealth management is a financial advice service that combines investment management, financial planning, and tax and estate planning to help grow and protect the wealth of mid- to high-net-worth clients. Often, a holistic approach is taken within wealth management. Holistic wealth management is a type of financial planning that creates a plan based on your preferences and what life stage you’re in. It goes beyond just investment management, or even just money management. It also accounts for your personal goals, major life events, and the future you see for you and your family.
What does a wealth manager do?
Here’s a list of the services wealth management is likely to include:
Goal setting: In some cases, you might visit a financial planner because you have specific goals you want to reach. But if that’s not the case, the financial planner can help you identify them.
Life event planning: Another important role of a holistic wealth manager is helping you plan for life events like marriage or divorce, having a baby, buying a new home, and more. These may be singular events, or they might be events that will impact your finances for years to come.
Cash flow management, spending, and budgeting: As a part of comprehensive financial planning, a wealth manager will help you identify the money coming in and going out and help you find a better balance in your spending.
Debt management: If you’re working to pay off debt, a wealth manager will help you prioritize your debt and craft a debt payoff plan that works in cohesion with your other financial goals and plans.
Protection: An important part of managing your finances is protecting them. This step includes helping you build an emergency fund and ensuring you have the appropriate insurance policies in place for every possible emergency.
Portfolio diversification: By limiting exposure to any one sector, size, or style in favor of greater diversification and balance, you may be better positioned against downside risk when a particular market or segment declines.
Growth: As you would imagine, an important part of wealth management is helping you to grow wealth. A planner does this by helping you craft your asset allocation and manage your investment portfolio in a way that fits your goals and risk tolerance.
Retirement planning: Planning for retirement is one of the most important jobs of any financial planner. A holistic wealth manager will help you identify your retirement goals and make sure you’re on track to reach them. They'll look beyond just the money you’ll need during retirement to examine what you really want your life to look like during those years.
Tax planning: Your planner can help ensure you’re doing everything correctly as it relates to your taxes and can identify ways to help you reduce your tax burden.
Estate and long-term planning: A wealth manager will work with you to create a long-term plan that includes what will happen to your assets after you pass away.
Charitable giving: Many people want to be more generous in their later years, using some of the wealth they’ve worked to build in a way that helps others. A financial planner can help you do this in a way that benefits not only those you’re giving to, but also your own finances.
How to choose a wealth manager
When choosing a wealth manager, you’ll want to consider multiple things.
Firstly, are you the kind of client the wealth manager or firm typically works with? Some wealth managers may require you to have a minimum amount in investable assets or only work with certain types of clients.
Secondly, you should look at the manager’s qualifications and which professional designations they hold. Key designations to look for include Certified Financial Planner professionals, Certified Public Account (CPA), and Chartered Financial Analyst (CFA), among others.
Finally, meet with any prospective wealth managers to ensure they are the right fit for your unique needs. It’s important to feel comfortable with whomever you hire as a wealth manager. Aim to find someone whose knowledge you trust and whose approach is consistent with your beliefs and goals. In your first conversation, ask advisors about topics, including:
Their qualifications
Fee structure
Fiduciary responsibility
Specialty areas
Investment philosophy
How they build portfolios (managed accounts, separate accounts, model portfolios, exchange-traded funds (ETFs), etc)
Investment products they use
What is the difference between asset management and wealth management?
Asset managers choose and manage their clients’ investments to maximize returns. An asset manager will determine what kinds of investments are best for your unique financial situation. Wealth managers have a broader focus and look at the full picture of someone’s financial life. Their goal is to look at their clients’ overall financial situation and make recommendations on how they can maximize and protect their wealth.
How much money do I need to hire a wealth manager?
Generally speaking, you may want to consider hiring a wealth manager if you have $50,000 or more in liquid assets. However, individual wealth managers and firms may set minimums in terms of investable assets, net worth, or other metrics for investors to obtain wealth management services.
How do I find a wealth manager?
You can search online to find an individual wealth manager or firm that meets your unique needs or get a recommendation from someone you know. Pay specific attention to the kinds of clients the manager or firm typically works with to get a sense of where their expertise lies and whether they are well-equipped to help you reach your financial goals.
Our take
Wealth management should ensure your financial moves and personal goals and values really line up. It should also support you through every phase of life, and different life events, to ensure your finances are prepared and protected.
Remember, holistic financial planning isn’t just for wealthy individuals. Because of the comprehensive approach it takes, it can help anyone set and reach their financial goals and feel confident in their money.
