What does a wealth manager do?
Editorial staff, J.P. Morgan Wealth Management
- A wealth manager may help mid- to –high-net-worth individuals at different stages of their financial journey build, maintain and preserve wealth.
- Wealth management services may include investment management, financial planning, estate planning, tax planning and more.
- When choosing a wealth manager, make sure your expectations match with the services they provide.
When it comes to building and sustaining wealth, the right knowledge may make a world of difference. Since not everyone has the information or time to build a comprehensive wealth plan, that’s when a wealth manager may be able to step in to help.
A wealth manager often works with individuals of mid to high net worth. Although the exact services provided can vary, most wealth managers offer comprehensive financial services to clients. A competent wealth manager may help you grow your wealth, preserve your wealth, minimize your liabilities, map out an estate plan and more.
What’s the difference between a financial advisor and a wealth manager?
Financial advisors may offer investment services to clients at all financial levels. In contrast, wealth managers may only work with clients with a mid-to-high net worth.
In many other ways, financial advisors and wealth managers offer similar services. However, wealth managers may offer financial management services that may be necessary for managing higher levels of wealth.
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What services does a wealth manager provide?
Different wealth managers might offer a different array of services. But generally, wealth managers may provide the following services:
- Investment management: Wealth managers may help you build an investment portfolio that aligns with your goals.
- Holistic financial planning: Wealth managers may take a look at your entire financial picture and goals. From there, they may use their experience to help you craft a personalized money management plan.
- Tax planning: Tax bills can take a bite out of your wealth. Wealth managers may advise on tax strategies to help minimize your tax obligations.
- Estate planning: Wealth managers may help you map out a plan for your assets for after you pass away.
- Legal insights: As you navigate life, a wealth manager may offer legal insights to help you safeguard your wealth.
- Retirement planning: When building a bright financial future for yourself, a wealth manager may help you set up a comfortable retirement.
- Insurance planning: A wealth manager may help you select suitable types of insurance for your needs.
How much does a wealth manager cost?
How much you pay for wealth management services varies based on the wealth manager you choose to work with. Some wealth managers charge a flat fee for their time. Others charge an assets under management (AUM) fee, which takes a percentage of your account balance each year. While these fees vary, they tend to fall between 0.5% to 2.0%, with 1.0% being the average.
When do you need a wealth manager?
A wealth manager may not always be essential. If you’re confident in your own ability to handle some or all aspects of managing your existing wealth, then hiring a professional might not be necessary. In fact, in certain circumstances it may cost you money in fees without offering much material benefit.
However, if you have a complex financial situation or questions about how best to manage your money, it may be worthwhile to work with a wealth manager. Below are some common situations when working with a wealth manager may make sense:
- If you experience a dramatic increase in assets: If your assets grew significantly over a short period of time, working with a wealth manager may help you make the right decisions to manage these newly acquired funds. For example, a large inheritance or lucky windfall may result in relatively instant wealth but also increased taxes and other unforeseen expenses that need to be dealt with.
- If you are selling a business: When you sell a business, you might see a large influx from the sale. But you’ll likely also see a drop off in income. A wealth manager may help you during the transition.
- If you have a complex financial situation: For those with multiple streams of income and various assets, working with a wealth manager may make coordinating your wealth easier.
How to choose a wealth manager
When selecting a wealth manager, you may want to consider the following details before moving forward:
- Credentials: You may want an advisor to have appropriate credentials. A wealth manager may hold a professional designation like Certified Financial Planner (CFP®), Certified Public Accountant (CPA®) or Chartered Financial Analyst (CFA®).
- Experience: It may be a good idea to work with a wealth manager with ample experience.
- Services: Consider what services a wealth manager offers both personally and through their firm.
- Fees: Of course, you’ll want to know what fees are involved. If you aren’t comfortable with the fee structure, consider seeking another option.
- Communication: Consider how often and through what medium you’d like to communicate with your wealth manager. Make sure your expectations line up with theirs before moving forward.
The bottom line
Finding the right financial help for your needs isn’t always easy. Exploring if a wealth manager is right for your needs may be a step you want to take at some point. If you do ultimately explore this option, do your research and due diligence, as this is a major life choice. And if you ultimately elect to hire a wealth manager, you may want to regularly review their performance while maintaining open communication about your financial goals and risk tolerance.
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