There are a lot of terms that may seem to be interchangeable when discussing investments, retirement planning and portfolios. It can be helpful to understand the main differences between a Wealth Manager and a Financial Advisor.
What is the difference?
Wealth managers are a subgroup of financial advisors, so they provide more specific advice and services. When looking to Liberate Your Wealth®, understanding what each professional provides will save you time and money when choosing the right partnership.
At the end of the day, which client needs are met is the biggest differentiator between a financial advisor and a wealth manager. Let’s explore.
A financial advisor provides a broad group of services, encompassing most client needs. A financial advisor also has a broader range of clientele compared to a wealth manager. While wealth managers work almost exclusively with high-net-worth clients, financial advisors have a wider range of clients.
Most wealth managers have a minimum net worth amount required to begin an engagement, whereas financial advisors typically do not set a barrier to entry. Individual firms will have criteria by which they determine the suitability of the relationship based on complexity, assets, and expertise.
There are different types of financial advisors who serve a variety of client needs. A Certified Financial Planner (CFP) will work with clients to craft portfolios and future financial planning - this is often focused primarily on retirement planning. A certified public accountant (CPA) may be a part of a financial advisory team to aid in tax planning (consulting) and preparation (compliance), or clients may choose to have a separate CPA relationship.
Although there are different types of financial advisors, with specific expertise and areas of interest, here are some of the overarching services a financial advisor may provide:
- Developing a financial plan
- Savings allocations
- Retirement planning
- Tax planning
- Inheritance and Trust creation
- College funding
- Business exit or succession planning
A wealth manager typically works with high-net-worth clients and provides a personal, deeper level of financial management. A High Net Worth Individual (HNWI) falls into the range of a net worth of $1 million or more of liquid investable assets. Their clients’ asset threshold is one of the biggest differentiators between wealth managers and financial advisors.
Since wealth managers mostly work with high-net-worth individuals, they are more hands-on with a family’s or individual wealth. Some of the services that would fall under the wealth manager’s role include:
- Investment management
- Estate planning
- Risk management
- Capital gains planning
- Philanthropic gifting
- Legacy planning
- Tax planning
- Real Estate transaction planning
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