Wealth Management: When To Hire A Money Manager

Wealth management is a financial advisory service that provides investment management and comprehensive financial advice to high-net-worth individuals with complex financial issues. The decision to use a wealth manager depends on your financial situation, goals, and expertise. If you're clear about your goals and can choose the right products and strategies to help you grow and protect your wealth, you may not need a wealth manager. However, if you have questions or need specialist input, a wealth manager could guide you in making informed decisions about your finances. Wealth managers typically charge a percentage fee of assets under management and have minimum investments in the millions of dollars.

Wealth managers offer a more holistic service than investment managers

Wealth managers work with high-net-worth individuals who often have complex financial issues and require a broad range of services. They coordinate the various services needed to handle their clients' assets and create a strategic plan for their current and future needs. This can include will and trust services, business succession planning, wealth transfer, and more.

Wealth managers may work as part of a small-scale business or a larger firm and can have different titles such as financial consultants or financial advisors. They often charge a percentage fee based on the assets under their management and typically have minimum investments in the millions of dollars.

In contrast, investment managers primarily focus on managing a client's investment portfolio and consider their financial goals and risk tolerance. They rebalance the portfolio as needed and adjust it for lower risk as the client approaches retirement age. Investment managers are usually compensated through commissions on the financial products they sell.

Therefore, wealth managers offer a more holistic service by addressing a wider range of financial needs and providing a fully customized solution designed to achieve their clients' financial goals and reduce financial stress.

Wealth managers are typically only worth it for high-net-worth individuals

Wealth managers can be a good fit for those who need help with financial planning, such as saving for retirement, creating a trust, or making a will. They can also be useful for those who are about to make a big financial move, such as purchasing a first home or retiring early.

The cost of wealth management varies, but it is typically charged as a percentage of the total value of the assets managed for a client. This can range from 0.25% to 1% of assets under management. Some wealth managers also charge by the hour, with fees ranging from $200 to $400 per hour.

Wealth management is a more holistic approach than investment management, which is limited to managing an individual's investment portfolio. Wealth managers take a comprehensive view of a client's financial picture and estate to build a full plan. This includes considering college savings goals, retirement income and expenses, insurance needs, and future philanthropy goals.

Wealth managers are typically worth it for high-net-worth individuals who can afford the cost of the service and who can benefit from the comprehensive financial planning that wealth managers provide.

Wealth management is a crucial part of protecting and growing your assets

A good wealth manager will first seek to understand your finances, goals, and lifestyle. They will then provide targeted financial advice and create plans to address various aspects of your financial life, including investing, tax planning, business plans, charitable giving, and estate planning.

Wealth managers are particularly useful if you are a high-net-worth individual (HNWI) with a lot of assets. HNWIs are typically defined as those with a net worth of at least $1.5 million or $750,000 in investable assets. These individuals often have complex financial needs and can benefit from the expertise and time commitment that a wealth manager provides.

Additionally, if you are about to make a big financial move, such as purchasing your first home, planning for an earlier retirement, or selling your business, a wealth manager can provide valuable knowledge, experience, and an objective viewpoint to help you make shrewd decisions.

Wealth managers can also be valuable if you are struggling to find the time or motivation to manage your finances effectively. Effective wealth management requires consistently investing time and effort into acquiring assets, researching and executing strategies, and regularly reviewing and adjusting your plans. A wealth manager can take on these tasks and help you avoid the negative consequences of delaying financial planning.

In summary, wealth management is a crucial aspect of protecting and growing your assets. It involves taking a holistic approach to your finances and creating tailored plans to help you achieve your financial goals. Wealth managers can be especially beneficial for high-net-worth individuals, those making significant financial decisions, and those who need support in consistently managing their finances.

Wealth managers can help with big financial moves like buying a house or retiring early

Investment Management

A wealth manager will work with you to develop an investment strategy tailored to your goals and risk tolerance. They may also select and manage investments on your behalf, often for an annual fee. This can be especially useful when planning for significant purchases like buying a house.

Financial Planning

Wealth managers can assist in developing a comprehensive financial plan that includes saving, investing, and spending goals. They can help you make sure you have enough money set aside for a down payment on a house or that you're on track to retire early.

Tax Advice

Wealth managers can provide guidance on structuring your finances to minimise tax liability. This is crucial when making major financial moves like buying a house, where there can be significant tax implications.

Estate Planning

Wealth managers can help you create a plan for what will happen to your assets after your death, including creating a will or trust and designating beneficiaries. This is an important consideration, especially if you're retiring early and want to ensure your finances are in order.

Retirement Planning

Wealth managers can provide guidance and advice on retiring early, including helping you determine if you have enough saved and how to make your savings last. They can also assist with creating a realistic budget for your retirement years.

Overall, wealth managers can provide valuable expertise and guidance when it comes to making big financial moves, such as buying a house or retiring early. They can help you make informed decisions and ensure your finances are on track to achieve your goals.

Wealth management can be expensive, with some services requiring a minimum of $10 million in investable assets

Wealth management is a financial advisory service for affluent clients. It typically includes personalised investment strategies and comprehensive financial planning. Wealth managers often charge a percentage fee of assets under management, and usually have minimum investments in the millions of dollars.

Wealth management services can be expensive, with some services requiring a minimum of $10 million in investable assets. For example, Fidelity's "private wealth management service", where a team of financial professionals manages your wealth, requires at least $2 million invested through Fidelity Wealth Services and $10 million or more in total investable assets. Vanguard also offers a "personal advisor wealth management service", which gives clients access to a group of financial specialists and a dedicated CFP, but the minimum to qualify for this service is $5 million.

Wealth management is the most advanced form of financial advisory service. A wealth advisor typically works with high-net-worth individuals (HNWIs) to create a tailored investment strategy to help them manage their assets. HNWIs are people with a net worth of at least $1.5 million, or for a more pertinent measurement when talking about wealth management, people with at least $750,000 in investable assets.

Wealth management is a crucial service for not just protecting but growing the assets you've accumulated, so you can meet current financial goals and maybe even build a nest egg worth passing down to future generations. Wealth managers can help with everything from investing to tax planning, business plans, charitable giving, estate planning, and beyond.

The decision to use a wealth manager depends on your financial situation and goals, as well as your financial expertise. If you're clear about your goals and confident in your ability to choose the products and strategies that will help you grow and protect your wealth, you may not need the help of a wealth manager. However, if you have complex financial needs, especially those associated with larger estates, or if you have questions you can't answer, a wealth manager could be a good option.

Frequently asked questions