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It’s safe to say that from time to time, everyone could use help managing their money. But while many people can get by with limited assistance, some may benefit from a hands-on approach.
People with high net worths—in the millions or approaching it—may want to work with an asset or wealth management firm. We’ll help you determine which type of professional help is right for you.
What Is Asset Management?
Asset management is a service with the goal of growing your money.
An asset manager focuses on your investments and may be referred to as an investment advisor, financial advisor, registered investment advisor (RIA), robo-advisor or even an investment broker.
Your asset manager might work alone or as part of a larger company that specializes in asset management. You don’t need to be wealthy to work with an asset manager—you only need to wish to start or optimize your investment portfolio.
An asset manager may or may not be a fiduciary—a financial professional required to keep their client’s best interests in mind—so be sure to check before signing up.
What Is Wealth Management?
A wealth manager is a financial advisor who specializes in working with clients who have high net worths. They also offer advice on a variety of financial aspects beyond your physical assets. As your wealth grows, your finances become more complex, which is where a wealth manager can provide their tailored expertise.
Wealth management might focus on saving for retirement and tax planning alongside insurance protection, estate planning, and trust management. These professionals may also offer more services than the typical financial advisor to cater to the complex needs of their clients.
A wealth manager is likely to be a fiduciary, but be sure to ask before signing on.
Should I Choose Asset or Wealth Management?
Wealth management firms usually work with high-net-worth individuals or families. You probably don’t need wealth management unless you already have a considerable amount of money in investments or have a large sum you are ready to invest.
A wealth management service may require $250,000; $500,000; or at least $1 million in investments to become a client. Minimums can vary by wealth management firm and service specialty.
If you have a lower net worth but want to grow your money, it may be worth considering an asset manager instead of a wealth manager.
Choosing an Asset Manager
When choosing an asset manager, check the manager or platform (if you’re using a robo-advisor) credentials. It’s important to determine whether a manager operates by a suitability standard or a fiduciary standard, with the latter method benefitting you most.
Beyond that, cost may be your biggest factor. Some investors can save by using passive management options, while others may want a more personalized approach that could cost more.
Choosing a Wealth Manager
Not all wealth management firms have the same strategy for every client. Depending on your situation, you may want to focus on growing your investments, optimizing your tax planning or creating a succession plan if you own a business. These are all valid strategies, but your wealth manager’s expertise and tactics should match your goals and concerns.
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If you’re thinking about working with a wealth manager, you’ll want to ask many of the same questions you’d ask before hiring any financial professional. You may also want to inquire about the person or firm’s experience with wealth management, and exactly what services their practice offers.
As with the decision to hire any financial expert, be sure to check for professional credentials. You can review someone’s certified financial planner (CFP) credentials via the CFP Board. Or you could use the Financial Industry Regulatory Authority (FINRA) BrokerCheck to look up advisors who are registered with the U.S. Securities and Exchange Commission (SEC).
The XY Planning Network also offers the ability to search for financial advisors who specialize in wealth management.
What Does It Cost to Hire an Asset Manager vs. a Wealth Manager?
Asset Management Costs
Costs to hire an asset manager can vary based on what kind of relationship you want. If you use a robo-advisor or work with a wealth manager who charges passive management fees for portfolios that lean heavily on index funds, you can expect to pay between 0.25% and 0.50% of your portfolio value per year. These fees are often described as a percentage of assets under management (AUM).
If you select active investment management, your fees will depend on who you hire and what investments are in your portfolio, but you can typically expect to pay 1% of your portfolio in annual fees.
Additional fees, such as account fees ranging from $25 to $100 per year or brokerage fees as high as $50 per trade, may apply.
Wealth Management Costs
Since a wealth manager handles a broader view of your finances, you might pay them flat fees by the hour, year or per type of service. Their fees may also depend on how much of your money they manage, similar to the percentages an asset management service would charge.
Looking For A Financial Advisor?
Get In Touch With A Pre-screened Financial Advisor In 3 Minutes
Looking For A Financial Advisor?
Via Datalign Advisory
