Wealth Management

Wealth management includes investment advisory services catering to affluent clients. Wealth management services offer wealthy individuals and their families a holistic approach to building and managing assets and investments.

Terry Turner, Financial writer for Annuity.org
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APA Turner, T. (2022, March 4). Wealth Management. Annuity.org. Retrieved May 25, 2022, from https://www.annuity.org/personal-finance/wealth-management/

MLA Turner, Terry. "Wealth Management." Annuity.org, 4 Mar 2022, https://www.annuity.org/personal-finance/wealth-management/.

Chicago Turner, Terry. "Wealth Management." Annuity.org. Last modified March 4, 2022. https://www.annuity.org/personal-finance/wealth-management/.

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Wealth management firms provide financial expertise on complex financial issues for wealthy clients typically in the top one to three percent of U.S. household income. Wealth managers manage clients’ investment portfolios and provide detailed financial advice on multiple issues and opportunities.

What Is Wealth Management?

Wealth management firms offer a broad range of financial services to wealthy clients. These involve managing personal finance issues, growing wealth for their clients and providing a means to transfer wealth to their heirs.

Typical Wealth Management Services
  • Accounting services
  • Charitable giving plans
  • Education planning
  • Estate and other legal planning
  • Insurance advice
  • Investment advice
  • Retirement planning
  • Risk mitigation
  • Stock options planning and advice
  • Tax services (including tax efficiency services)

Wealth management is best suited for households that are already wealthy and have diverse financial planning and management needs.

How Much Do You Need to Take Advantage of Wealth Management?

Wealth management is tailored to affluent individuals in the upper 97 percentile of household incomes – about $350,000 per year or more. Some wealth management firms may require a minimum investment of $250,000 to $10 million.

Typically, people with large amounts of wealth need more services to manage their assets than those with less wealth. Wealth management firms can provide specialized services to meet those needs.

How Does Wealth Management Work?

Wealth managers are specialized financial professionals who manage all aspects of their clients’ needs for a single fee. These individuals or wealth management firms take a percentage of the assets they manage.

Fees typically begin at about one percent of the managed assets, but vary across different firms or even within accounts in a single firm.

Wealth management firms tend to use one of two approaches that work best for their clients: collaborative and single office.

Wealth Management Approaches
Collaborative
The wealth management firm or an individual Certified Financial Planning (CFP) professional coordinates the household’s financial planning and investment management with the client’s other advisors – insurance, legal, tax and other planning professionals.
Single office
Sometimes called “family offices” in large banks or brokerage firms, these units provide experts in all areas of wealth management. This provides a one-stop shop for individuals or families looking to consolidate all their wealth management needs in one firm.

How To Find the Best Wealth Manager

Finding the best wealth manager for your needs depends on which approach you believe is best for you. But it also requires careful consideration of a firm’s record and qualifications.

You can shop around with small firms or individual wealth managers who can work with your other financial advisors.

Or if you prefer having all your wealth and financial planning done through one firm, you should look to large institutions.

Steps To Take Before Hiring a Wealth Manager
  1. Ask to speak to current clients.
  2. Compare services available with different firms.
  3. Look at the value of the wealth manager’s advice – don’t focus on price alone.
  4. Research the wealth management firm’s background.
  5. Compare each firm’s fee schedule.
  6. Understand how your advisor is being paid – and be cautious if it’s a commission on products they sell you.
  7. Verify potential advisors’ credentials with the Securities and Exchange Commission.
  8. Verify that the advisor you met will be the one you are working with.
  9. Ask about client-advisor relationships and availability.

Understand that a private wealth manager may offer more personalized service while wealth management through a large financial institution may be able to leverage more opportunities by pooling resources from a large number of wealthy clients.

Wealth Management Alternatives

If you do not have a high net worth, you probably would not benefit from the services of a wealth manager. A more affordable choice would be a financial or investment advisor.

While wealth management is largely focused on building and maintaining the wealth of affluent clients, financial advisors can help people of more modest means with a wide range of financial services.

Financial advisors can provide financial planning, retirement planning, investment management and tax advice. They tend to specialize in a narrow range of products and services.

Examples of Financial Advisors
  • Certified public accountants (CPA) specialize in taxes and accounting.
  • Chartered life underwriters (CLU) are experts in life insurance and estate planning.
  • Certified financial planners (CFP) specialize in helping you plan and work toward your financial goals.

While some wealth managers accept clients that aren’t super rich, you should carefully consider whether you would benefit from wealth management services. Weigh the costs and benefits and consider your alternatives.

Wealth Management vs. Asset Management

You should also not confuse wealth management with asset management. Though these may appear similar, wealth management has a much broader range of services. More people, even small businesses, may find an asset management plan affordable and worthwhile.

Wealth Management vs. Asset Management
ASSET MANAGEMENT WEALTH MANAGEMENT
Narrowly focused on assets – cash, stocks, bonds, real estate and other assets Focused on your assets as well as other elements of your wealth – taxes, estate planning, retirement planning, insurance, risk assessment and more
Applies to individuals, businesses and other institutions or entities Is designed for individuals or families
Available to almost anyoneDesigned specifically for high net worth individuals or families

Asset management deals with buying, selling and managing your assets. There are firms that specialize in this but you may have done this by buying a house, enrolling in a retirement plan at work or talking with a financial advisor about retirement planning.

Wealth management is largely the domain of millionaires and billionaires who are building on their wealth, protecting it and planning to include it in their legacy planning.

Please seek the advice of a qualified professional before making financial decisions.
Last Modified: March 4, 2022

3 Cited Research Articles

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  1. Chamberlain, M. (2018, April 20). What Is Wealth Management? A Definition that Works for Everyone. Retrieved from https://www.forbes.com/sites/feeonlyplanner/2018/04/20/what-is-wealth-management-a-definition-that-works-for-everyone/?sh=4cd18aa82dfb
  2. Iftikhar, S. (2021, September 1). Dispelling Four Common Wealth Management Misconceptions. Retrieved from https://www.forbes.com/sites/forbesfinancecouncil/2021/09/01/dispelling-four-common-wealth-management-misconceptions/?sh=6eba80715a54
  3. Lipscomb, S. (2021, September 1). How and When Is Wealth Management Worth It? Retrieved from https://finance.yahoo.com/news/wealth-management-worth-000730186.html