Financial Planning vs. Wealth Management
Financial planning primarily focuses on creating a roadmap for an individual's financial future. It includes budgeting, retirement planning, saving, and tax strategies. However, it is focused on creating the plan rather than executing the plan.
Wealth management provides a more holistic approach, including financial planning. It is tailored towards high-income earners and high-net-worth individuals. It includes financial planning, investment management, estate planning, and legal or tax advice.
Author: Will Grant, CFP®, CPWA®, Wealth Manager
Financial planners typically assist clients in setting and achieving specific financial goals, often working on a shorter-term and more tactical level.
Wealth managers, on the other hand, provide ongoing strategic advice and manage a client's entire financial situation over the long term. If you have $1M or more in investable assets, then you could likely strongly benefit from wealth management over the long term.
When you have a great wealth management team, they will help you prepare for the future and weather all manner of financial changes and milestones, including preparing for retirement, saving for your children’s education, dealing with your estate planning, and creating a robust and balanced portfolio based on your financial situation.
A wealth management team will provide custom strategies that align with your family’s vision and values.
Your wealth management team will provide financial planning as a part of your big-picture wealth management strategy alongside an entire suite of wealth management tools and services.
While both roles require a deep understanding of finance, wealth managers often deal with more complex financial tools and strategies, catering to the unique needs of wealthier clients.
Common Questions
Is wealth management superior to financial planning?
Wealth management is not necessarily superior to financial planning; it offers a more comprehensive service that includes financial planning as one of its components, typically suited for those with more complex financial situations.
If you are a high-income earner with investable assets of $1M or more, then wealth management is likely best for you.
Why? Well, you likely don’t have the time or inclination to manage the complexities of preserving and managing your investments and creating a wealth strategy.
With greater assets comes the opportunity to use more complex wealth management tools that most people don’t wish to research and execute independently.
What's better, a wealth manager or a financial advisor?
Whether a wealth manager or a financial advisor is better depends on your financial needs.
A wealth manager offers a broader range of services for wealthy individuals, while a financial advisor is focused on specific financial planning and investment advice.
When you work with a wealth management team, you’ll have a financial advisor and the support of other financial professionals to help you navigate all significant events in life or business.
Is wealth management only for the ultra-rich?
Wealth management is not exclusively for the ultra-rich; it is also beneficial for individuals with substantial assets who require more comprehensive financial oversight and planning.
Wealth management is typically beneficial if you have $1M or more in investable assets.
For those with $2M or more in investable assets, it is often the best choice. However, it’s quite possible that if you manage your wealth independently without the help of a wealth management team, you will not maximize your tax-saving opportunities.
You may have a portfolio that isn’t aligned with your long-term goals and is either excessively risky or conservative.
In addition, it’s all too common for busy individuals to overlook estate planning, which your wealth management should help you plan and execute.
At what point should I get a wealth manager?
You should consider getting a wealth manager when your financial situation becomes complex.
This typically occurs when you have a significant amount of assets and need integrated management across investments, taxes, estate planning, and other financial services.
If you have $1M or more in investable assets, it’s likely time to schedule an introductory call with a wealth management professional to see if their services will be of value to you.
What are the benefits of wealth management?
The benefits of wealth management include a holistic approach to managing all aspects of your financial life, offering customized strategies that encompass investment management, tax planning, estate planning, and risk management.
Are there specific services that distinguish financial planning from wealth management?
Specific services that distinguish financial planning from wealth management include the latter's focus on more comprehensive and integrated financial strategies, including investment management, tax advice, and estate planning, beyond the scope of traditional financial planning.
Do financial planners and wealth managers serve different client needs?
Financial planners and wealth managers serve different client needs; financial planners typically focus on specific financial goals and strategies, while wealth managers offer a broader, more integrated approach for clients with more complex financial situations and higher net worth.
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About the Author
William Grant
Will Grant enjoys empowering people to make informed decisions and seeing the positive impact his guidance can have on their lives. Prior to joining 360, he spent seven years serving hundreds of clients at a boutique RIA focused on healthcare executives with equity compensation and then at a large, independent RIA. He earned a Bachelor of Science degree in Finance from Miami University and holds his Series 7 and 63 licenses through LPL Financial and his 65 license through 360 Financial. Schedule a 15-minute Call with Will
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This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
