Understanding the difference between wealth management and a financial advisor

Are you considering private wealth management services? Would you like to know what the difference is between wealth management vs a financial advisor?

In this article, we will examine what financial advisors and wealth management companies do to support your financial goals.

Let’s start by helping you set the appropriate financial expectations for using either service.

How Much Money Do You Need to Hire a Wealth Manager?

If you’re considering hiring a wealth management advisor, you may want to think about your budget. Wealth managers and financial advisors do not provide free services.

Just like any other service, they do expect to be compensated for their work. This is why it is so important to choose an advisor who provides services that can fit comfortably within your budget.

There are two different types of payment structures for financial management services. One is fee-based and the second is fee-only.

In most cases, advisors will provide you with a brochure or Form ADV to outline their services, offers, fees, and any potential conflict of interest that might apply to your investments.

Now, back to the difference between fee-only and fee-based.

Fee-only advisors earn money through the fees you pay them, which is often based on a percentage of the assets you have under management. They may also charge a flat fee or even an hourly rate.

Fee-based advisors make money through client fees, but may also charge commissions or brokerage fees for certain kinds of products.

When deciding which option is right for you, you may also want to look at other options that are free from the commissions, management fees, and annual charges that often come with an advisor.

However, for fully customized advice, you’ll want to choose either a private wealth management company or a financial advisor.

Let’s take a deeper dive into what each offers you.

What Does a Wealth Management Advisor Do?       

A wealth management advisor provides consulting services. They are typically hired by financial institutions and are well attuned to clients with a greater amount of wealth. They can also work as freelancers or entrepreneurs and customize their services to fit their clients.

Not surprisingly, wealth management advisors provide information and recommendations for investments in the markets their clients are interested in. They also inform their customers about taxes and other relevant financial information.

In many cases, they also work with accountants and lawyers to provide a holistic financial recommendation or plan for their clients which may include estate planning concepts and ideas.

If you want a wide array of financial services and your portfolio is well established, then a wealth management advisor might be the right choice.

What Is the Difference Between a Wealth Manager and a Financial Advisor?

Wondering what the difference is between wealth management vs financial advisor services? Consider the following.

The Definition of a Financial Advisor

In contrast with a wealth manager, a financial advisor is an expert who helps their clients with a wide array of financial services. Their specialty is typically in the financial planning and investment management arenas.

There are multiple types of financial advisors, and they aren’t married to a specific genre or set of services.

For example, a certified public accountant (CPA) holds a certification to work with both accounting and taxes. Another example is a chartered life underwriter (CLU) who provides information and recommendations for life insurance and estate planning.

In most instances, a financial advisor lends their specific knowledge and expertise to develop personalized financial plans to help their clients achieve financial goals. Those goals may include savings, budgets, insurance, or tax planning.

Financial advisors also help their clients regularly re-evaluate their situation to create the best path forward.

The Definition of a Wealth Manager

A wealth manager is a niche component of financial advising, generally with broader and deeper knowledge of the problems most often associated with higher net worth households. They assist in managing the assets of high-earners. They help connect their clients with every service and financial product they need to maximize their financial situation. In most cases, they provide a holistic view of your assets. Whether you need assistance with your retirement fund or real estate investments, tax or estate planning, they have your back.

A wealth management advisor provides custom financial solutions. They work one-on-one with you to understand your situation.

While you may be convinced that private wealth management is only for the uber-rich, people of any financial standing can use their services. They can provide one-off advice, solutions, or service that are surprisingly reasonable in cost.

Do I Need a Wealth Management Advisor?

So, is a wealth management advisor the right choice for your financial situation?

The answer is up to you.

However, wealth managers provide services that financial advisors cannot and often do not provide. They should help you navigate investing concerns and financial hurdles.  More complex concepts should be made simpler and more understandable when working with a wealth advisor. They also provide long-term support for your financial goals & future plans.

If you’re interested in exploring private wealth management services, we would be happy to discuss your needs and concerns. Reach out to us via our contact form to learn more about how we can help you build a strong financial future.

To learn more about Cooke Financial Group's services, please visit our About page.