Managing your money well usually requires help from experts. It’s crucial to seek advice from professionals to decide where to invest, grow and protect your wealth, and manage taxes efficiently.
This is where wealth managers and financial advisors play a role. People often use these terms interchangeably, but they have distinct differences. Here’s what you need to know.
What is a Wealth Manager?
A wealth manager is a financial expert who mainly helps people with a lot of money – this sets them apart from regular financial advisors.
Wealth managers can make plans for your money, covering things like estate planning, investments, property, retirement, and even divorce.
Some wealth managers need you to have a certain amount of money before they work with you. For example, Charles Schwab asks for at least $1 million.
Fidelity offers wealth management too. You need at least $250,000 with them. But if you want a whole team of financial experts, you need at least $2 million with Fidelity and $10 million in total assets.
So, you see, you need a lot of money, especially if you want a team, not just one person, to help you.
Many big banks also offer wealth management. Check if your bank has this service and if you qualify.
Wealth managers usually get paid based on a percentage of the money they manage for you.
What is a Financial Advisor?
Financial advisor gives advice on various topics such as retirement, taxes, insurance, savings, and planning for your assets after you pass away. One of their main roles is to help you create an investment plan and offer suggestions on where to invest your money. Financial advisors are licensed to work with specific types of investments.
Financial advisors usually work with a more diverse group of people regarding their income and wealth. However, some financial institutions might still require a minimum amount of money for you to use their services, although these minimums are usually smaller than what wealth managers require.
Financial advisors can charge fees in different ways. They might take a percentage of the money they manage for you, earn a commission on the insurance and investment products they sell, or charge a flat or hourly rate without considering the amount of money you have.
Which Choice is Your Wealth Manager or a Financial Advisor?
Deciding on a financial expert to help you achieve your goals is a very personal choice. Consider important factors like fees, investment philosophy, planning approach, and reputation rather than just labels like “wealth manager” or “financial advisor.”
In general, if you have a lot of money, a wealth manager might be more suitable due to their expertise. For those with a smaller budget, a financial advisor can offer excellent service at a more affordable price.
If you don’t meet the requirements for these professions but still need financial advice, you could explore robo-advisors. These services gather information about your investment preferences, risk tolerance, goals, and time frame. They then suggest investment portfolios that automatically adjust as your needs change over time. Betterment and Wealthfront are reliable options for robo-advisory services.
Summary
Wealth managers and financial advisors may sometimes seem like they can be used interchangeably but wealth managers tend to work with richer clients. Even if you don’t have enough assets to work with a wealth manager or financial advisor, you can still seek other types of services that can help you reach your goals, such as a robo-advisor.
