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Financial Advisor vs. Wealth Manager: What's the Difference?

Eric Brown - Apr 08, 2021
When you start thinking about better ways to handle your money, you may start looking for an expert to help you. But when you begin this search, you’ll quickly run into discussions about both financial advisors and wealth managers.

When you start thinking about better ways to handle your money, you may start looking for an expert to help you. But when you begin this search, you’ll quickly run into discussions about both financial advisors and wealth managers. Is there a difference between the two, and if so, which should you work with?

The difference between a financial advisor and a wealth manager is one of both scale and goals. Read on to learn more about each of these experts and which one you should work with.

What Is a Financial Advisor?

In the simplest terms, a financial advisor is an expert who can provide you with financial planning and investment management advice. They help you find smarter ways to handle your money so that you can meet your financial goals and grow your wealth. However, the term “financial advisor” is broad and can encompass a variety of different experts.

You may hire a certified personal accountant as your financial planner. These experts have certification to help you with your taxes, as well as your investment decisions.

You can also hire a chartered life underwriter, an advisor who specializes in life insurance and estate planning. Your bank may also have financial advisors who have the expertise you need without any additional certifications.

What Is a Wealth Manager?

Technically speaking, a wealth manager is another division under the umbrella of financial advisors. However, wealth managers are distinguished by their clientele. In general, wealth managers work with people who already have a significant net worth and are looking to manage it going forward, rather than people looking to grow their wealth.

Wealth managers offer a variety of different services to their clients to help them manage their money. They may provide advice on investments, tax services, and retirement planning, as well as philanthropic advice, legal advice, and more. In general, a wealth manager will work to provide any and all financial services that their clients may need.

Financial Advisor Clients

Financial advisors may have clients in any financial situation. On the lower end of the scale, financial advisors can help people with small incomes make their money go further and advise them on how to work up to meeting their financial goals. They can also help people learn how to get out of debt and make smart financial choices that will put them on the path to wealth.

On the other end of the spectrum, financial advisors can help well-established people start growing their wealth. They can advise them on the best investments to make and set them up with smart saving and retirement plans. They may also be able to help families set up university funds or investment funds for their children.

Wealth Manager Clients

As mentioned, wealth managers work with clients who are already in a strong financial position. These clients already have a high or ultra-high net worth, and they aren’t looking for advice on how to pay off debt or begin an investment profile. Rather, they’re people who are looking for ways to make their money last through the rest of their life and beyond.

Wealth managers work with clients who need advice on the best place to put the substantial wealth they already have. They may be able to help them decide the best way to make philanthropic contributions or set up trust funds. They may also offer investment advice for non-stock market investments, such as real-estate investing or other high-value opportunities.

Financial Advisor Costs

Financial advisors have a variety of payment options that they can offer, based on their preferences or their clients’ needs. One of the most common options is an advisor taking a commission that’s a percentage of the money they’re managing. In general, these commissions range between 3% and 6%.

Financial advisors can also charge annual retainer fees, ranging between $2,000 and $11,000. They may charge flat fees that can range between $1,000 and $3,000 for a certain period of advice. Or they may charge hourly fees, with these usually falling somewhere in the $120 to $300 range.

Wealth Manager Costs

Wealth managers also have a variety of payment methods, though the most common one is a commission. This commission is usually a percentage of the wealth they’re managing for you. This percentage may range between 0.7% and 1%, depending on the amount of money they’re managing for you.

If a wealth manager is handling less than a million dollars for you, you can expect to pay commission fees around the 1% range. Clients with $10 million or more will pay on the lower end of the scale, around 0.7%. Some wealth managers also choose to charge flat annual fees, ranging anywhere from $10,000 to $60,000.

Choosing the Right One for You

When you’re deciding whether you should work with a financial advisor or a wealth manager, the first thing you’ll need to look at is your bank account. If you have close to a million dollars or more, it may be time to look into working with a wealth manager; less than that will fall in the realm of a financial advisor.

When making this decision, you should also consider what you’re wanting to do with your money. If you want to focus on growing your wealth and making smarter financial plans, savings, and investments, a financial advisor will be the right choice for you. If you’re wanting to plan for your future and that of your family, you should talk to a wealth manager.

Learn the Difference Between a Financial Advisor and a Wealth Manager

At first glance, the difference between a financial advisor and a wealth manager may seem tiny, to say the least. However, financial advisors help you grow your wealth and establish a strong financial position for yourself. Wealth managers help you use existing wealth to achieve your overall life goals.

If you’d like to find the right financial help for you, check out the rest of our site. We can help you manage your portfolio, build your wealth, and plan for the future. Book a meeting today and start planning a secure and prosperous future for your family.