What is Wealth Management?

There are so many terms today for financial help: financial advisors, investment management, certified financial planners, wealth managers, and wealth management advice. What type of help do you need and what should you know?

What is wealth management?

Wealth Management is a term in the financial planning and investment world to describe overall financial planning services for wealthy, and affluent individuals.

The wealth management approach is more comprehensive, and holistic than just a financial or investment management approach. When using wealth management strategies, you have a team of knowledgeable professionals rather than one specific area of support in your financial planning. For example, instead of only having an investment or financial advisor, your team would have tax planning and tax advisors, estate planning, risk management, and other team members reviewing your entire financial situation and creating a plan and strategies to support your long-term goals and needs.

What is the purpose of wealth management?

The purpose of wealth management is to make sure you are taking care of your entire financial picture, not just one aspect. Investing in the stock market or your retirement plan, (Roth IRA, Traditional IRA, 401k, etc) is great. However, if you are not set up with life insurance to take care of your home mortgage or making decisions now to plan and prepare your estate for your golden years, you are not only missing out on the bigger picture but could be losing all those investment gains to taxes and fees you did not plan for.

As we grow older and gain more financial assets, the picture can become more complex than just investing to retire on time. That is where a strong wealth management team can help you and your family create a tailored plan to support your goals and dreams in the future. Don’t miss out on opportunities now you may regret later.

Do Wealth Managers Make You Money?

While there is no guarantee that a wealth manager will make you money, the goal of a wealth manager should be to protect their clients’ wealth and support their long-term financial planning needs. While investment advisors and financial planners focus on one piece of your financial situation, wealth managers combine several areas of financial guidance. A wealth manager not only provides investment advice and recommendations but should also support estate planning and tax preparation goals to help maximize your financial picture.

How does a wealth manager get paid?

This all works by either fee-based or fee-only based compensation to your firm. Wealth managers either take a fee directly from their clients for their services, called fee-only. This is often a percentage of the assets under management or a flat rate determined by you and your wealth manager. Many firms may charge 1% of the total assets under management (AUM).1

Fee-based services may include a flat rate like in fee-only but may also include a commission from a product when they sell a product or service from a business. For example, some mutual funds may provide a commission to a wealth manager or financial planner to sell their products. This can be a challenge if your advisor is not acting as a fiduciary.

Do I need a wealth management approach?

The short answer is probably yes! It can be intimidating to think you qualify for a wealth management approach, but the reality is that if you own a home, have retirement savings, and have financial assets over $500,000, you could benefit from a more complete approach to your financial plan.

See if you could benefit from a wealth management strategy. Our team of fiduciary wealth planners would love to discuss your goals and see if there is a fit. Get started today, schedule your free appointment!

1 – SmartAsset