What Is a Wealth Manager?

What Does a Wealth Manager Do?

Wealth managers are a type of financial advisor that helps wealthy clients with large portfolios manage their assets. Their services often include:

• General financial planning: An experienced wealth manager can offer personalized financial guidance, including retirement planning advice. They can also help you navigate life changes that could impact your finances, such as getting married or divorce or starting a business.
• Legal and estate planning: This is often more complex for wealthy individuals who may want to create a trust to distribute their remaining assets to their heirs—all while minimizing estate taxes. Proper estate planning can also put legal guardrails in place to help protect your wealth.
• Investment advice: High-net-worth investors may be interested in alternative investments that carry more risk, such as hedge funds or peer-to-peer lending.
• Tax advice: A wealth manager might suggest tax-loss harvesting or other strategies to help reduce your tax liability, which can be hefty for high-net-worth clients.
• Philanthropic planning: A wealth advisor can help their clients be strategic about charitable giving. That may involve opening a donor advised fund, which allows you to make tax-deductible donations, then write grants to your favorite nonprofits.

Wealth Manager vs. Financial Advisor

A wealth manager is a type of financial advisor who works specifically with affluent clients. "Financial advisor" is a general term that can also refer to a certified financial planner (CFP), investment advisor or investment broker. Each of these titles carries different responsibilities, but you don't need a special credential to call yourself a financial advisor.

Many wealth advisors are also CFPs, but some pursue other designations—such as the Wealth Management Certified Professional certification or the Accredited Wealth Management Advisor certification. Both require candidates to complete an educational component, pass an exam and adhere to a code of ethics.

How Much Does a Wealth Manager Cost?

Like other types of financial advisors, wealth managers can have different fee structures. How much you pay, and how you're charged, can vary depending on their services and expertise. A wealth manager might make money in one or both of the following ways:

• Commissions: Wealth managers who work on commission are compensated for making trades or selling financial products like mutual funds.
• Fees: Fee-only financial advisors do not receive commissions on financial products they recommend. Instead, they may charge a percentage of the total assets under management (AUM), typically 1% to 2%. They might also charge an hourly fee of a few hundred dollars or fixed fees for one-off services, but every wealth manager is different.

Who Should Consider a Wealth Manager?

Working with a wealth manager could be worthwhile if:

• You have a high net worth. Managing a large portfolio of assets can be overwhelming. The right wealth manager can make expert recommendations based on your unique situation and financial goals. They can also help you minimize taxes and make a legacy plan that's aligned with your values.
• You own a business. Whether you own a small family business or a large enterprise, a wealth manager can help you make progress toward your personal financial goals. Some wealth managers may also be uniquely qualified to offer business advice.
• You have complex financial needs. You may have recently come into a large inheritance and need help navigating the financial complexities that come with it. Similarly, you might benefit from a wealth advisor if you're selling a successful business or going through a high-net-worth divorce.

Is a Wealth Manager Worth It?

Whether hiring a wealth manager is worth it depends on your financial situation and needs. If your finances are relatively straightforward, you might feel comfortable working with a general CFP who can help you make a comprehensive financial plan. But a wealth manager might be the best fit if you're looking for a financial professional who understands the unique needs of affluent clients. You can expect to pay more if they're managing millions of dollars in assets, but that may be worth it if they provide financial peace of mind—and offer advice that leads to significant tax savings or investment gains.

How to Choose a Wealth Manager

If you've got a lot of assets to your name, you'll want to choose a wealth manager who has experience working with high-net-worth clients. Consider the following tips before making a decision:

• Ask for referrals. You might get a recommendation from a friend, family member or colleague. Put your feelers out and see if someone in your network has a wealth manager they trust.
• Check their credentials. A wealth manager will have an insider's view of your finances, and may even manage your investments on your behalf. That means you'll want someone you can trust. For example, if they say they have the CFP designation, run their name through the CFP Board to verify it. You can also use FINRA's BrokerCheck database to search for credentialed investment advisors.
• Clarify their services. Think about what you're looking for in a wealth advisor. For some, that may be estate and tax planning advice. Others may be more concerned about investing and portfolio management. You'll ultimately want someone who understands your needs.
• Ask about their fees. If you find a wealth manager who feels aligned, clarify their fee structure and rates. How do they get paid? And how much can you expect their services to cost you? If they charge a 1% AUM fee, and you have $1 million invested, you'd pay $10,000 in annual fees.

The Bottom Line

A wealth manager is a financial advisor who specializes in the needs of high-net-worth clients. They can offer comprehensive financial planning services and in-depth financial analysis. That can help their clients minimize their taxes, maximize their investment returns and ensure that their assets are passed onto the next generation. A wealth advisor who also has the CFP designation will have a fiduciary duty to their clients—meaning that they're obligated to act in their best interests at all times.