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Do I need a wealth manager? How to tell & what to expect

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Hiring a wealth manager isn’t as easy as hiring a financial advisor or a financial planner. In fact, don’t feel bad if you’ve never even heard of a wealth manager or been approached by one. In most cases, you don’t go out and find a wealth manager — they find you. They look for a particular type of client who has some very unique needs.

You might be asking what exactly a wealth manager does, how much they cost, and when you need one. After reading this article, you may even decide that you want to become a wealth manager. Let’s pull back the curtain on wealth managers.

What is a wealth manager?

Simply put, a wealth manager is someone who helps wealthy people manage their money. To best understand this definition, let’s first define who qualifies as being wealthy.

Anyone who is considered a high net worth, very high net worth, or ultra-high net worth individual is deemed to be wealthy enough to be a potential client for a wealth manager. You’ll know if you’re one of these affluent individuals if you meet the following criteria:

  • High net worth individuals (HNWIs) have investable assets between $1 million and $5 million
  • Very high net worth individuals have investable assets between $5 million and $30 million
  • Ultra-high net worth individuals have investable assets over $30 million

If you meet any of these qualifications and don’t already have a wealth manager, don’t hang up on one if they call you. They may be able to help you grow your net worth, preserve it when you’re ready to dial your earnings back a bit, and pass it along in the most tax-efficient manner possible.

[ Related: What is net worth? ]

What does a wealth manager do?

Wealth managers help do this by providing:

  • Investment advice and portfolio management
  • Capital gains planning
  • Alternative investment planning
  • Risk management
  • Retirement planning
  • Estate planning
  • Tax planning
  • Philanthropic and legacy planning

Some wealth managers also offer other unique services, like concierge health care.

How much does a wealth manager cost?

In Beverly Hills, salespeople who sell high-end fashion and jewelry have been heard to say, “If you have to ask how much it costs, you can’t afford it.” Fortunately, that’s not the case with how much a wealth manager costs — the answer is a bit more complicated.

The cost of working with a wealth manager depends on whether they work for a large firm, a smaller boutique firm, or independently.

High net worth individuals and above who work with a wealth manager employed by a large firm (think giant banks and brokerages) will usually pay a substantial fee initially to have a financial plan developed ($10,000 to $25,000, or more), pay a percentage of the money they invest in investment management fees, and pay ancillary costs for professional services (attorneys, CPAs, etc.).

Wealth managers who work for smaller firms may charge smaller fees for their services, and independent wealth managers have much greater discretion with their initial and recurring management fees.

Like all other professionals, the more experienced, well-known, and well-respected a wealth manager is, the more they can and will charge their clients.

Wealth managers vs. financial advisors & planners

The difference between these three types of financial professionals usually comes down to the complexity of a client’s needs.

Over the years, many life insurance agents have chosen to upgrade their image by referring to themselves as financial advisors. This is, in fact, appropriate considering that most professional agents do much more than sell life insurance.

Many agents now have securities licenses that allow them to offer mutual funds or other investments, and they help clients with other insurance needs, like long-term disability insurance and health insurance.

Financial advisors are most often paid through commissions they earn on the insurance and investments they sell. Most do not charge a fee for a financial plan.

Financial planners have often earned the Certified Financial Planner (CFP) designation. They typically work on a fee-only basis, meaning they charge a fee for creating a financial plan but don’t earn commissions on any insurance products they sell or refer to insurance agents.

Financial planners also charge clients an additional fee for investment assets under management (AUM), which typically starts at 1% and decreases as AUM increases.

Wealth managers often work with individuals and families who have previously used the services of a financial advisor or financial planner, but whose financial situation has become much more complex and need the guidance of someone experienced in helping HNW, VHNW, and UHNW individuals and families.

[ Related: 6 common designations in finance, explained ]

How to find a wealth manager

If you need a wealth manager and use the services of a larger bank, they very likely employ wealth managers under the guise of “private” banking services for their affluent clients.

While it’s relatively easy to find a wealth manager at your bank, a trusted advisor like your CPA or tax attorney will also likely be able to refer you to a wealth manager. Advisors often develop working relationships with wealth managers who refer them new clients in need of accounting or legal services, and they get to know who the more reputable and trustworthy wealth managers are.

And, as always, referrals from friends and family who spend time in the company of HNWIs and above may be able to tell you about a wealth manager they’ve worked with personally or have heard positive things about.

How to become a wealth manager

Very few wealth managers begin their financial services career as wealth managers. They often start their career working for a bank, brokerage, insurance company, or another type of financial institution.

While they’re gaining experience, aspiring wealth managers are also becoming experts in their field and are earning professional designations like CFP (Certified Financial Planner) and/or CFW (Chartered Wealth Manager).

When do you need a wealth manager?

There is no set age when you should hire a wealth manager. While some people don’t begin working with one until they’re nearing retirement in their 60s, there are successful entrepreneurs, executives, and business owners who need the services of a wealth manager when they’re in their 30s or 40s.

Regardless of your station in life financially, if you choose to work with anyone concerning your finances, check their credentials and background if they’re not referred to you by someone you trust.

Your state’s insurance department can verify if someone has a valid license to sell insurance and the Financial Industry Regulatory Authority (FINRA) has a handy BrokerCheck tool you can use to confirm that someone who wants to sell you investments is licensed and in good standing.

The information and content provided herein is for educational purposes only, and should not be considered legal, tax, investment, or financial advice, recommendation, or endorsement. Breeze does not guarantee the accuracy, completeness, reliability or usefulness of any testimonials, opinions, advice, product or service offers, or other information provided here by third parties. Individuals are encouraged to seek advice from their own tax or legal counsel.

— Published June 2, 2022
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