Wealth Manager vs Financial Advisor: What’s the Difference?
Securing long-term finances is a top priority for many people. To help protect their assets, many people partner with a professional for financial advice. Wealth managers and financial advisors offer a wide range of services designed to safeguard your net worth and make sure you have enough money to reach your dreams. But what’s the difference between these two groups? Learn more about what they typically offer and which one is suitable for growing your nest egg.
What Do Financial Advisors Do?
Financial advisors are licensed professionals who offer advice for managing money. This includes building an investment strategy and leveraging specific securities to safeguard and grow assets. They work with a wide variety of people and generally don’t have a minimum net worth for potential customers.
What Do Wealth Managers Do?
Wealth managers are a type of financial advisor. They provide more specialized strategies to their partners, including:
- Asset allocation: A wealth manager dispenses an investment portfolio among various asset categories, like stocks and bonds.
- Diversification: Wealth managers use diversification as a risk management strategy and impact asset loss.
- Rebalancing: A common strategy used by wealth managers is realigning a portfolio to maintain risk management when markets shift.
- Tax management: Minimizing the impact of taxes is a top priority for wealth managers. This process involves selling securities and replacing them with similar investments.
One major difference that distinguishes wealth managers from other financial advisors is the clientele they work with, typically high-net-worth individuals and their families.
How Do I Know if I Need a Wealth Manager?
Having a secure financial position today doesn’t mean you’ll have one in the future. Working with a wealth manager provides peace of mind by knowing a dedicated financial professional is managing your money. Here are some signs that you should start:
You Want to Invest More
Growing your net worth through investing requires a thorough understanding of how markets operate. Making poor decisions could impact your long-term financial goals and create a situation where you’re chasing losses. Partnering with a financial professional provides key insight into risk-averse securities that safeguard your assets.
You’re Looking to Maximize Your Options
Most individuals do not understand the nuances of various bonds and stock options. Hiring a wealth manager provides key insight into which mutual funds are best for your long-term financial health. They can also help determine the best time to divest options and reduce the costs of selling your position.
You Want to Protect Your Assets From Taxes
High-net-worth clients are often in the highest tax bracket, meaning Uncle Sam is ready to take his cut. Working with a reputable wealth manager gives you access to tax-saving strategies that reduce your burden and allow you to keep more of your money.
You Want to Create an Estate Plan
For many individuals, protecting the interests of their families after they pass is a top priority. By working with a wealth management advisor, you can create an estate or legacy plan that carefully details how your assets should be distributed after you die.