Wealth Management: Important Role of Wealth Managers

Wealth management advisors are high-level professionals who holistically handle the wealth of affluent clients.

FREMONT, CA: There is more to wealth management than investment advice. It might include all aspects of an individual's financial life. Individuals with a high net worth may benefit more from an integrated approach than they would from attempting to integrate the advice and products of multiple professionals. A wealth manager coordinates the services required to manage their customers' assets and develops a strategic plan for their present and future needs, including will and trust services and business succession plans.

Some wealth managers prefer to specialize in particular sectors, such as cross-border wealth management, while others offer services in all areas of the financial industry. A wealth manager's expertise or the industry in which they operate may determine this.

In certain situations, a wealth management advisor may need to coordinate the input of external financial specialists and the customer's internal service providers (such as an attorney or accountant) to develop the most promising approach for the client. Some wealth managers also provide banking services and charitable giving advice.

Illustration of Wealth Management

Wealth management offices generally have a staff of specialists and professionals prepared to offer advice in various disciplines. Consider a client with $2 million in investable assets, a trust for their grandchildren, and a recently deceased business partner. In addition to investing these monies in a discretionary account, a wealth management firm would provide the necessary will and trust services for tax minimization and estate preparation.

Wealth management advisers directly employed by an investment firm may have greater expertise in investment strategy. In contrast, those who work for a large bank may concentrate on managing trusts and accessible credit alternatives, comprehensive estate planning, or insurance possibilities. In short, organizations may possess varying levels of knowledge.

Wealth Management Organizational Structures

Wealth managers may work for either a small business or a larger, primarily financial industry-related organization. Depending on the industry, wealth managers may hold several titles, such as financial consultants or financial advisors. A customer may receive wealth management services from a single designated wealth manager or have access to established wealth management team members.

Compensation for a Wealth Manager

Advisors can charge for their services in many different ways. Some fee-only advisors charge a yearly, hourly, or flat fee. Some work on commission and are compensated for selling investments, and Fee-based advisors receive a combination of fees and commissions for selling investment products.

According to a recent poll of financial advisors, the typical advice fee (up to $1 million AUM) is approximately 1 percent. However, other advisors demand higher fees, particularly for accounts with lesser balances. Individuals with greater balances can frequently pay far less, as the median AUM charge falls as assets increase.

Credentials for Wealth Managers

You should examine a professional's credentials to see which certification and training best suits your demands and circumstances. Certified Financial Planner, Chartered Financial Analyst, and Personal Financial Specialist are the three most prestigious credentials for professional advisors. Numerous websites of professional certifying organizations permit you to determine whether a member is in good standing or has been subject to disciplinary actions or complaints. Professional designations are explained through a tool provided by the Financial Industry Regulatory Authority (FINRA). You can also determine if the issuing body mandates continuing education, accepts complaints, or provides a mechanism to verify who possesses the credentials.

Approaches of a Wealth Manager

Based on the client's financial condition, objectives, and risk tolerance, the wealth manager develops a plan to preserve and grow the client's wealth.

Importantly, all aspects of a client's financial picture, including tax planning, wills, and estates, are integrated to safeguard the client's wealth. This may overlap with retirement planning and financial expectations.

After the initial plan is formed, the manager meets with clients monthly to revise and rebalance their financial portfolios and to update their goals. Simultaneously, they may evaluate whether more services are required, with the ultimate goal of remaining in the client's service for life.