A guide to private wealth management

Private wealth management is a type of investment advisory that includes many financial services, including financial planning, investment portfolio management and more.

When considering private wealth management services, it’s critical to understand what’s offered and the fees involved.

What is private wealth management?

Private wealth management may involve a full range of financial services meant to service someone’s unique financial circumstances, particularly high-net-worth individuals who may lead complex financial lives.

These services might include retirement planning, tax strategy, estate planning, investment guidance, financial goal setting and more.

Individuals can find private wealth management services through financial institutions, like large banks and smaller firms dedicated to wealth management services in particular.

Is private wealth management the same as private banking?

Private wealth management and private banking often overlap. However, private banking usually focuses on personalized banking services. In contrast, private wealth management tends to encompass broader financial needs, including investing, advanced tax strategies, estate and succession planning and more.

How much money do you need for private wealth management?

As mentioned above, private wealth managers generally reserve their services for high-net-worth individuals. Although most private wealth managers tend to have a minimum net worth threshold for prospective clients, that threshold varies across wealth managers.

For example, some private wealth managers might require clients to have a net worth of at least $1 million, while others may only work with individuals with a net worth of over $30 million in investable assets.

How does private wealth management work?

In many ways, private wealth management allows for the outsourcing of financial planning and investing to a trusted financial advisor. For high-net-worth individuals without the time or knowledge to manage their funds on their own, private wealth management will step in with a customized and comprehensive financial plan to execute on their behalf.

Individuals who may want to take a more active role, but have a complicated financial picture, may decide to engage private wealth management services to be able to lean on expertise as needed.

Private wealth management services

Private wealth management tends to include an array of financial services. Although exact offerings vary based on the firm you work with, these services may include:

Although you can seek out an individual professional for each of the services above, working with a private wealth manager or a firm providing private wealth management services may streamline your financial management.

Private wealth management costs

In most cases, private wealth managers charge a fee based on assets under management (AUM). For example, some managers might charge a 1% AUM fee. However, some wealth managers charge a flat fee for their services.

For high-net-worth clients, a flat fee might be more affordable than an AUM fee over time, but that will depend on the arrangement.

When choosing a private wealth management service, read the fine print to make sure you understand and are comfortable with the fee structure before moving forward.

Pros and cons of private wealth management

As with all financial services, private wealth management comes with advantages and disadvantages. Explore both sides below.

The potential pros of private wealth management:

The potential cons of private wealth management:

The bottom line

With a better idea of what private wealth management can do, you can decide if it's a good fit for your situation.

With the high barrier to entry for private wealth management services, you may also want to consider the other options available.

Interested in working with an advisor? J.P. Morgan Wealth Management is here to help.

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