Wealth Management Advisor
A wealth management advisor is a high-level professional who manages an affluent client's wealth holistically, typically for one set fee. This service is usually appropriate for wealthy individuals with a broad array of diverse needs. Financial advisors manage the financial situation of a client. Wealth managers are a type of financial advisor often associated with clients with a high net worth. Both professionals manage and assist with financial planning, but wealth managers typically specialize in assisting clients with large amounts of wealth.
Wealth management services include, but are not limited to:
- Investment management and planning including hedge funds and money markets.
- Retirement planning.
- Legal services.
Wealth Management and Financial Planning
Whether you are pursuing a career in investment banking, commercial banking, capital markets, or any industry, everyone should prioritize being their own finance professional as early as possible.
Being knowledgeable and educated about managing your financial well-being is arguably one of the most important skills in your adult life. The saying “knowledge is power” cannot be more relevant when it comes to personal finance.
Wealth Management Advisor vs. Financial Planner
Think of Wealth Management and Financial Planning as lying on a spectrum of personal financial advisory services. Why? Because while both Wealth Managers and Financial Planners ultimately give personal financial advisory services, each comes with its own demographic that they work with. Below is a list of commonly defined tiers of clients based on investable assets; typically, a Financial Planner will deal with just Mass Affluent.
• Mass Affluent: $100,000 to under $1 million
• High Net Worth (HNW): $1 million to $10 million
• Ultra-High Net Worth (UHNW): $10 million and greater
Each tier is not set arbitrarily; the above brackets are guided by the general amount of investable assets a client would need to participate in certain investment products.
For example, suppose a client holds $6 million of investable assets. In that case, an Advisor is unlikely to present the client with an opportunity to invest in a private equity fund that requires a minimum of $5 million to be locked up for a 5-year period.
It creates the need for Advisors to focus on a segment of the client population and develop specialized expertise on investment products available to them. In this way, you can even think of a Wealth Manager as a type of Financial Advisor and treat the entire practice as general Financial Planning. And this gives us enough context to be able to answer our question: what is the difference between a Wealth Management Advisor and Financial Planner?
Wealth Managers will also provide a broader range of services and have a wider variety of investment products available – they will have a larger “shelf” of products to offer. Their clientele will be comfortably in the High Net Worth and Ultra-High Net Worth thresholds, and as a result, they will already have the basic financial goals of education planning and tax planning achieved.
Wealth Manager’s clients may require extensive tax planning and succession and estate planning, and it will require the Advisor to take a much more proactive role in their client’s wealth management. In such a way, a Wealth Manager may even end up being a touch point for the client’s attorneys, business managers, and accountants, which is something a typical Financial Planner would not typically do.
The above example illustrates how a Wealth Manager is much more involved in their client’s finances than a Financial Planner. In most cases, a Financial Planner may meet with the clients once or twice a year, but it would not be unusual for a Wealth Manager may be in touch every month.