What Is Wealth Management?
What Is Wealth Management?
Definition & Examples of Wealth Management
By Tim Lemke Updated on June 8, 2022
Wealth management is a kind of financial advisory service for accredited investors and others with high net worth. Wealth managers provide advice about investing, estate planning, taxes, and anything else that can help grow a client's wealth. Understanding how wealth management works and how it compares to asset management can improve your financial picture.
Definition and Example of Wealth Management
People who have a high net worth may need more services than those offered by traditional financial advisors. Those with millions—perhaps even billions—of dollars may have complex portfolios, complicated tax situations, and other needs that are unlikely to apply to average investors.
Wealth managers often have access to a wider range of financial products and services. Clients pay a fee, but they receive strategies designed with their finances in mind. Services offered by wealth managers may include:
Investment management and advice, including retirement planning
Accounting and tax services
Review of health care and Social Security benefits
Charitable giving plans
Help with starting or selling a business
You likely don’t need a wealth manager if you don't have a high net worth. You may instead prefer to pay for a financial or investment advisor who can help you grow your money over time.
Note: A financial advisor may be able to help you build your wealth. But a wealth manager can help you manage your money when you’ve already achieved a high net worth.
How Does Wealth Management Work?
Like most financial advisors, wealth managers earn their income by taking a percentage of the assets they manage. These fees can vary among firms and even across different types of accounts within the same firm. You can expect to see fees start around 1% of assets under management.
Breaking into wealth management is a good career move for financial advisors. A wealth manager would earn $50,000 in commissions in a year from one client if they were to charge a fee of just 0.50% to a client with $10 million in their portfolio. The more clients a wealth advisor has, the more those fees add up.
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