By 360 Financial, Big Picture Planning and Wealth Management
What's the difference between a wealth advisor and a financial advisor?
The terms wealth advisor and financial advisor are often used interchangeably, but they are not the same.
A financial advisor typically helps clients manage investments and develop strategies for specific goals, like retirement or funding education. Wealth advisors go further. They cater to high-net-worth individuals, offering comprehensive services like tax strategies, estate planning, and legacy-building.
Think of it this way: if financial advisors are general practitioners, wealth advisors are specialists who focus on managing more complex financial portfolios. Understanding this difference is key to choosing the right professional for retirement planning.
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Wealth Advisor vs Financial Advisor
Understanding the key differences between wealth advisors and financial advisors can help you decide who to hire.
Financial Advisors: Focus on investment management and planning for specific goals like retirement.
Wealth Advisors: Offer a broader range of services tailored to high-net-worth individuals. They address tax efficiency, estate planning, and wealth transfer strategies.
Retirement Planning Focus: Financial advisors may concentrate on ensuring you meet basic retirement income needs. Wealth advisors design strategies that seek to preserve wealth for future generations.
Both professionals can be helpful. Your choice depends on your financial complexity and goals.
What Is a Financial Advisor?
A financial advisor helps you create a roadmap for pursuing your financial goals.
They provide advice on managing income, investments, and debt. For retirement, they might recommend specific accounts like 401(k)s or IRAs and create a savings strategy. Financial advisors can work with clients at various income levels. Their focus is often on aligning day-to-day financial decisions with long-term goals. If you want guidance on how much to save or where to invest, a financial advisor may be the right fit.
Remember that there are many different types of financial advisors with a wide range of designations, experience, and education. Make sure you find a financial advisor with experience helping people who have a similar financial situation to yours.
What Is a Wealth Advisor?
A wealth advisor specializes in managing the financial complexities of high-net-worth individuals.
Their services go beyond investment advice. They design strategies for minimizing taxes, preserving assets, and transferring wealth.
Retirement planning with a wealth advisor involves creating sustainable income streams, managing risks, and considering your legacy. If you have significant assets and want a holistic approach to financial planning, a wealth advisor could be your ideal partner. They seek to ensure your wealth supports your retirement and the generations that follow.
Key Differences Between a Wealth Advisor and Financial Advisor
Wealth advisors and financial advisors offer distinct services that cater to different needs.
Services: Financial advisors typically help with investment management and retirement planning. Wealth advisors focus on investment management, tax strategies, estate planning, and multi-generational wealth transfer.
Client Focus: Financial advisors work with a broad range of clients. Wealth advisors usually serve high-net-worth individuals and families who require specialized expertise.
Approach: Financial advisors prioritize goal-based planning. Wealth advisors take a holistic view of your financial life, addressing current and long-term objectives.
Understanding these differences ensures you select the right professional for your retirement journey.
In addition, it should be noted that “wealth advisor” and “wealth manager” are often used interchangeably. Moreover, not all wealth advisors or financial advisors are the same. There is a wide range of experience and expertise within the financial services industry.
Make sure you find a professional with the education and experience to help someone with your financial situation.
Do You Need a Wealth Advisor or a Financial Advisor?
The type of advisor you need depends on your financial complexity and goals.
If you are focused on saving for retirement or managing investments, a financial advisor may be sufficient. A financial advisor can guide you through account selection, contribution strategies, and basic tax planning.
If your financial situation includes large assets, business interests, or estate concerns, a wealth advisor is a better choice. A wealth advisor specializes in creating strategies that preserve and grow significant wealth, seeking to ensure your retirement plan aligns with your legacy goals. Evaluate your priorities to make the best decision.
You Don’t Need to Be a Billionaire to Work with a Wealth Advisor
Wealth planning involves strategic investment management, tax optimization, and estate planning.
However, you don't need to be a billionaire (or even close to that) to see benefits from working with a wealth management firm.
Wealth planning refers to creating a comprehensive financial strategy that seeks to manage, grow, and protect an individual's or family's wealth over the long term. It involves assessing one's current financial status, setting clear goals, and implementing tailored solutions in the following areas:
Investment management
Tax efficiency
Risk management
Retirement planning
Estate planning
Succession planning
Insurance policies
Wealth planning seeks to ensure that financial resources are aligned with one's personal values and future objectives.
Maybe you want to fund your grandkids' education, buy a vacation property, or pursue philanthropy. Perhaps you want to build your dream home or travel for six months. Whatever your goals, wealth planning can help you get there.
Wealth planning integrates various financial disciplines to create a holistic plan that adapts to life changes, economic conditions, and one's evolving priorities, aiming for sustained financial health and legacy preservation.
For many high-income earners, wealth planning provides confidence in their future.
How Much Money Do You Need for Wealth Management?
Most wealth managers serve clients with high net worth, often requiring $1 million or more in investable assets.
This threshold exists because wealth management services are tailored to complex financial situations. Managing significant assets requires specialized knowledge in tax strategies, estate planning, and investment management.
Some wealth management firms may have a lower minimum of $500,000 or less, while others work exclusively with ultra-high-net-worth clients exceeding $10 million. And, of course, there’s everything in between.
These client minimums ensure that the services offered match the needs of clients with intricate financial lives. If your investable assets are below $500,000, a financial advisor or financial planner may be a good starting point.
How to Evaluate Your Financial Needs Before Choosing an Advisor
Start by assessing your financial situation and the level of advice you require.
Take inventory of your assets, income streams, and debts.
Are your finances straightforward, or do they involve complexities like multiple investments, real estate, or business ownership?
Do you need help budgeting and saving, or do you want a plan for preserving wealth and minimizing taxes?
Simpler needs might call for a financial advisor, while a wealth advisor is better for addressing intricate financial situations. This self-evaluation will clarify which advisor is best suited to guide your retirement planning.
What Is the Cost of Working with an Advisor?
Advisor fees vary widely, depending on the services they provide and how they charge.
However, typically, both types of advisors charge a percentage of assets under management (AUM) annually.
Financial Advisors: The cost of working with a financial advisor typically ranges from 0.65% to 1.5% of AUM annually.
Wealth Advisors/Wealth Managers: Fees are often tiered based on asset size. They might charge 0.65% to 1.5% annually for AUM, but clients with higher balances may be able to negotiate lower rates.
Understanding these costs helps you choose an advisor who fits your budget and needs. It’s also important to make sure that there are no hidden costs when working with a financial advisor. For example, it’s important to ensure you are not being sold packaged products with high commissions and fees.
We recommend that you work with a fiduciary legally obligated to put your best interests first.
Credentials to Look for in Wealth Advisors
The right wealth advisor will have certifications that demonstrate expertise and ethical standards. Key credentials to consider include:
Certified Financial Planner (CFP®): Experts in financial planning, including retirement, taxes, and investments.
Chartered Wealth Manager (CWM®): Focused on managing high-net-worth portfolios.
Accredited Estate Planner (AEP®): Specializes in estate and legacy planning.
Accredited Investment Fiduciary (AIF®): Emphasizes adherence to a fiduciary standard, making it highly relevant for those seeking transparent and ethical financial guidance.
Wealth Management Certified Professional (WMCP®): Centers on advanced wealth strategies, integrating investment management, tax optimization, and estate planning.
Certified Private Wealth Advisor (CPWA®): Tailored for high-net-worth individuals, focusing on sophisticated strategies for wealth preservation, legacy planning, and tax efficiency.
Chartered Financial Analyst (CFA®): Specialists in investment management and analysis.
Certified Public Accountant (CPA): Skilled in tax strategy and planning.
Personal Financial Specialist (PFS®): Certified Public Accounts with advanced knowledge of financial planning and wealth management.
As you can see, there are a lot of different designations that a wealth advisor may have. Naturally, no wealth advisor will have all of these designations. The goal is to find someone who you feel comfortable working with who also has the experience and qualifications to help you.
When you work with a holistic wealth management firm, you’ll find a team of professionals with a variety of designations who work together to provide you with the best possible advice.
Always verify an advisor’s credentials through official directories.
Credentials to Look for in Financial Advisors
A qualified financial advisor should have certifications that verify their expertise and ethical practices. Key credentials to consider include:
Certified Financial Planner (CFP): Demonstrates broad expertise in financial planning, investments, and retirement strategies.
Chartered Financial Consultant (ChFC): Focuses on advanced financial planning, including risk management and retirement.
Series 63, 65, or Series 7 Licenses: Required for advisors offering investment guidance or selling securities.
Certified Investment Management Analyst (CIMA®): Advanced knowledge in investment portfolio management.
Accredited Asset Management Specialist (AAMS®): Specializes in investment advice and asset management.
These qualifications indicate that the advisor has the skills and ethical foundation to provide sound financial advice.
Always verify credentials with the issuing organizations to confirm their validity.
Private Wealth Management for Retirement Planning
Private wealth management tailors retirement strategies to the needs of high-net-worth individuals and families.
Wealth managers design retirement plans that go beyond basic income needs. They focus on preserving wealth, minimizing taxes, and ensuring financial security for future generations. Services may include setting up trusts, diversifying investment portfolios, and creating tax-advantaged withdrawal strategies.
(There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.)
For families, private wealth management can address multi-generational planning, ensuring assets transition smoothly to heirs.
These personalized strategies help clients maintain their lifestyle in retirement while safeguarding their legacy. Wealth managers also provide ongoing adjustments as financial and market conditions evolve.
It should be noted that the term wealth manager is often used interchangeably with the term wealth advisor.
Common Questions
At what level of wealth do you need a financial advisor?
You can benefit from a financial advisor at any income level if you need help saving, investing, or planning for goals like retirement.
For comprehensive wealth management, many advisors recommend having at least $500,000 in investable assets.
How does wealth management differ from asset management?
Wealth management is holistic, addressing investments, taxes, estate planning, and more.
Asset management focuses specifically on managing your investments. Wealth managers offer broader services for high-net-worth clients, while asset managers concentrate solely on optimizing portfolio performance.
What does a wealth manager do for high-net-worth individuals?
A wealth manager provides tailored advice, including investment strategies, tax planning, estate planning, and legacy building.
They seek to ensure that high-net-worth individuals’ wealth is preserved, grown, and aligned with their goals. They offer personalized solutions for complex financial needs.
What services are typically included in wealth management?
Wealth management typically includes investment advice, tax strategies, estate planning, retirement planning, risk management, and philanthropic guidance.
However, all wealth management firms are different. Find out which services are included when you speak to a wealth management firm.
What are common designations to look for in private wealth managers?
Look for designations such as CFP, CFA, CPA, PFS, and AEP.
These credentials indicate expertise and adherence to ethical standards in wealth management.
Do wealth management firms only work with high-net-worth clients?
Most wealth management firms specialize in serving high-net-worth clients due to the complexity of their financial needs.
Some firms have lower asset thresholds, but their services may be more limited. Assess your financial situation to determine if wealth management is right for you.
Should I work with a Certified Financial Planner?
A Certified Financial Planner offers professional expertise in creating comprehensive financial plans.
They follow strict ethical standards and can help with retirement planning, investment strategies, and more. Their certification ensures they’re well-qualified to guide your financial decisions.
What is a private wealth manager?
A private wealth manager is a financial professional who provides personalized financial services to high-net-worth individuals and families.
These services include investment management, tax planning, estate planning, and strategies that seek to preserve and grow wealth over generations.
What do financial planning services include?
Financial planning services include budgeting, retirement planning, investment advice, tax strategies, insurance analysis, and saving for goals like education.
Financial planning services help individuals and families create a financial roadmap.
Which financial professionals serve high-net-worth individuals?
High-net-worth individuals are served by wealth advisors, private wealth managers, estate planning attorneys, tax professionals like CPAs, and specialized investment advisors.
These professionals collaborate to address complex financial needs and optimize wealth management strategies.
Final Thoughts
Choosing between a wealth manager and a financial advisor depends on your financial complexity and goals.
Financial advisors may excel at helping with savings and investments, while wealth managers focus on preserving and growing significant wealth. Assess your needs, goals, and assets to find the right fit. Both professionals can guide you toward a comfortable retirement, but the right choice depends on your financial situation.
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About 360 Financial
360 Financial is an independent wealth management firm with a team of specialized financial advisors and financial planners. As fiduciaries, 360 Financial’s advisors provide services to business owners, entrepreneurs, and professionals. We help investors with sudden wealth, retirement planning, tax planning, estate planning, and business financial planning.
Headquartered in Minnesota, we serve investors across the US with online and in-person wealth management and financial planning services.
