Wealth management is the most advanced form of financial planning services — it includes comprehensive investment management alongside financial advice, tax guidance, estate planning and even legal assistance.
The type of service offered by a wealth management firm is best suited to affluent clients. But while you may not require wealth management now, your needs are likely to change over time. At some point, it may be time to look into wealth management.
What is wealth management?
Wealth management is the highest level of investment advisory services. A wealth management advisor typically creates a specially tailored investment strategy and plan for their clients to help them manage their assets.
Wealth managers generally aim their services at the highly affluent and may have expertise in the types of financial questions that affect the ultrawealthy, such as how to avoid the estate tax. They often coordinate services among different experts, such as working with a lawyer or an accountant on your behalf.
How much money do you need for wealth management?
In short: A lot. Wealth management services often require steep account minimums. For example, Fidelity’s “private wealth management service,” where you have an entire team of financial professionals working on your behalf, requires at least $2 million invested through Fidelity Wealth Services and $10 million or more in total investable assets.
Fidelity also offers a simpler “wealth management” service, where you work with an individual advisor and requires a $250,000 account minimum.
Vanguard, another online brokerage, offers a range of financial advice services; the one it describes as “wealth management” requires a $5 million minimum.
Is a wealth manager worth it?
A wealth manager should be able to assist with all of your financial-planning needs, up to and including, for example, managing the tax ramifications of business income and setting up a donor-advised fund for your charitable contributions.
Financial planners may offer similar services to wealth managers, but often they’ll let you purchase services on an “a la carte” basis. For example, if all you want is help figuring out how you’ll meet your retirement income needs, some financial planners will work with you to create a retirement income plan, and you pay solely for that service.
If you need assistance estate planning, specialized tax help or investing advice, it may be worth getting professional help now to protect and preserve your assets later.
Wealth management vs. portfolio management
Wealth management offers more complete financial planning than portfolio management. It includes comprehensive guidance on a client’s financial situation, including investment management, estate and tax planning, accounting, retirement planning and even legal guidance in some cases.
Portfolio management refers to a service or person who crafts an investing strategy on behalf of a client. Portfolio management involves picking investments that minimize risk and maximize returns, but typically does not include other financial planning services.
An alternative: online financial planning services
If those wealth-management minimums are more than you bargained for, then you probably don’t need wealth management. While some financial planners also focus on ultrawealthy clients, there’s a growing cadre of financial advisors who work with both affluent and middle-income folks. Some of these advisors operate online.
Online financial advisors offer portfolio management (also called investment management) and in-depth financial planning, including access to a human financial planner. Often, these services are delivered entirely over the phone or by video conference. While you may not meet in person, you’ll work directly with a financial advisor who can help you build a holistic financial plan or reach a specific goal.
The services offered vary by provider. Facet Wealth, for example, offers unlimited access to a dedicated advisor who is a certified financial planner. You’ll pay a flat annual fee, which varies depending on the complexity of your financial needs, and the service includes investment management.
At Personal Capital, clients with more than $200,000 invested get access to two dedicated financial planners; that service and investment management is included in the 0.89% fee.
Other providers, like Vanguard Personal Advisor Services, offer ongoing access to a team of finance pros. Those professionals will answer your financial questions and help you create a financial plan, but you generally won’t speak to the same dedicated advisor each time.
» Learn more about how to choose a financial advisor.
Some providers will help you with specific financial questions but not others — for example, complex questions around the taxation of self-employment income might be beyond the scope of some companies.
Given all the variety, it’s important to shop around to find the service that best meets your needs. Here are some of our favorite advisory services that include access to a human financial planner:
» View our full list of the best financial advisors
Frequently asked questions about wealth management
Wealth managers also tend to offer more services than financial advisors. These services can include estate planning, trust services, family legacy planning, charitable giving planning and legal planning. Some wealth managers have even incorporated concierge health care into their services. Keep in mind that the job title “wealth manager” is also a generic term that can be used by anyone and does not indicate any specific credential. Always be sure to vet any type of financial advisor you use. You can look up an advisor on the Financial Industry Regulatory Authority’s BrokerCheck tool.
The strategy a wealth manager employs should match the individual investor’s risk tolerance and financial goals. For example, if a client is nearing retirement, a wealth manager might start shifting the focus from risky growth investments to safer investments that can help a retiree maintain their wealth. “A wealth manager should understand that an individual with a higher net worth has more complex needs, and that should be taken into account when determining an appropriate strategy for that person,” says Aimee Kwain, vice president of advanced planning at Fidelity. “Conversely, someone with a more complex financial situation should make sure they ask the right questions and select the wealth manager best equipped to help them create a financial plan covering all of their needs, from investments to estate planning.”