What Is Wealth Management?

On Oct 3, 2019 at 8:39 am UTC by Adedamola Bada · 5 min read
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Photo: QuoteInspector
Photo: QuoteInspector

Have you heard about wealth management? Check out this guide to find out what wealth managers do and understand whether you need to hire such an expert.

Financial planning needs of an individual tend to change over time, the kind of advice you might be getting now could seem irrelevant in a much broader sense. As an individual’s wealth increases, the type of management needed to deal with those finances depends on the level of financial status.

People with great wealth are usually advised to get experts for their wealth management. Wealth management gives a more comprehensive view of an individual’s finances which can now be better managed to generate even more revenue from all parts of the investments.

Understanding of Wealth Management

Wealth management is an investment advisory discipline done by only a limited number of certified professionals who seek to manage the entire area of finances of an individual. Such professionals usually work with those individuals who hold high net-worth or ultra-high-net-worth assets.

Wealth management aims to address all the areas of an individual’s financial and seek to manage them better to generate more wealth over the long term. Wealth managers coordinate and plan such issues as investment management, retail banking services, legal and tax advice as well as others.

The worth of an individual determines whether a wealth manager is needed or not, the U.S. Securities and Exchange Commission (SEC) explicitly states that a high net-worth individual is someone that has at least $750,000 under management. While some wealth managers might pose an account minimum restriction, some others are open to individuals with less than $750,000 worth of invested assets.

How Does Wealth Management Work?

Wealth management seeks to merge both financial planning and specialized financial services with an aim to plan and execute long-term strategies for the sustenance and growth of a client’s sizable wealth. The manager also considers those factors that are unique to the client like their goals, risk’s comfort level, and the entire financial situation to develop the plan.

The manager will then fix consecutive appointments with the client to give him information on the plan being executed for the individual’s financial profile. The plan can be re-reviewed and re-adjusted depending on the events that may happen during the period of the plan.

Wealth managers also aim to add required services to areas of need so as to help wealthy clients find more feasible financial solutions.

What Services Can a Wealth Manager Provide? 

Wealth managers offer numerous services and should have experience in a lot of related areas including estate planning, wealth transfers, tax, retirement planning, mortgages, risk management, trust services, banking services, and several other expertise while acting as the main point coordinating all decisions and actions made in these fields.

The wealth manager formulates strategies that are personalized to the individual’s financial situation. Such a professional also acts as an intermediary point between the client’s other advisors and financial experts.

What Fees do Wealth Managers Charge? 

A fee schedule would be set between the client and the wealth manager to decide how much and when the client would pay. In most cases, wealth managers may ask for a percentage of the assets being managed. The average percentage is 1%, but the rate might be lower depending on the total assets worth of the client.

Some wealth managers are paid based on hourly fees or fixed annual fees, and this would not include the fees incurred along the process – like expenses incurred by employing the services of outside experts or counsel.

The national average salary for a wealth manager is $103,635 in the United States and might be more which depends on the firm or individual providing the services.

How Should You Choose a Wealth Manager? 

There are some tips and steps which the client may take into consideration to secure the right wealth management professional. The client should get familiarized with the portfolio being handled by wealth managers. This will help to understand the specialization and expertise of a specialist. 

Also, the client should get a picture of the services and experience level of a wealth manager, the pricing and track record. There exists a good resource for the client to reference. It is known as the Form ADV which is paperwork that all the financial advisors and firms have to file to get registered with the U.S. Securities and Exchange Commission. 

This bounds all practicing professionals to a fiduciary duty to act in their client’s best interests at all times. The Form ADV also contains the disciplinary issues an advisor or firm might have on their record.

Wealth Manager vs. Financial Planner vs. Investment Advisor

An investment advisor is a professional who maintains a focus on long-term investment plans for clients with an above-average amount of wealth as well as deals with all sorts of investments and securities for the client. Such an expert creates a personalized investment portfolio for clients and takes steps to generate more revenue for them.

A financial planner is an expert who provides clients with advice on how to grow their wealth as well as creates a comprehensive plan for the financial future for clients. Your financial planner will assess your current financial lifestyle and help you to achieve long-term goals by setting budgets and making financial plans.

A wealth manager is someone who helps individuals, with a large number of assets and significant revenue income. Wealth managers take into account the total financial status of clients and elaborate strategies on how to enhance clients’ wealth.

Wealth managers differ from the former two as they do more comprehensive work. 

Conclusion

Choosing the right financial professional to deal with their wealth is a necessity for individuals seeking to achieve their financial goals. Wealth managers usually work with individuals with really high net-worth assets who are looking for proper management of their entire financial operation.

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