What Is Wealth Management and Do You Need It?

Wealth management is a branch of financial advising focused on protecting and growing the wealth of high- and ultra-high-net-worth clients. A wealth manager usually assesses a client's finances, goals, and lifestyle to provide customized advice regarding tax planning, estate planning, charitable giving, and more.

Why is managing wealth important?

As your wealth grows, your financial situation gets more complicated. Forces such as capital gains taxes, estate taxes, fees, and inflation can chip away at your wealth over time, potentially shrinking the income you have now and the estate you leave your loved ones. Wealth management helps mitigate these issues to protect and grow wealth for you and your heirs.

Key objectives in wealth management

Wealth managers tailor their advice to each client's financial situation and goals. Still, the general strategies used in wealth management are designed to:

• Help you grow and protect your wealth while minimizing risk.
• Set and develop strategies to meet your financial goals.
• Manage your investments based on your risk tolerance and time horizon.
• Use tax-efficient strategies to reduce the impact of local, state, and federal taxes over time.
• Ensure that you are adequately insured (e.g., health, disability, long-term care, life, umbrella, and property policies).
• Create strategies to pass wealth to your loved ones and other beneficiaries.
• Maximize the reach and impact of your charitable giving.

Which services fall under the umbrella of wealth management?

A wealth manager will get to know you and customize their services based on your financial situation and needs. While the services vary by client, wealth managers typically offer:

• Comprehensive financial planning.
• Investment management and recommendations.
• Risk management.
• Tax planning and accounting services.
• Insurance planning.
• Legal planning.
• Trust and estate planning.
• Retirement income planning.
• Charitable giving.
• Legacy planning.

How much does a wealth manager cost?

Wealth managers usually charge a fee based on a percentage of the assets under management (AUM). On average you can expect to pay about 1%, but it can be higher or lower depending on the size of your portfolio. For example, you might pay 1% for $1 million worth of AUM or 0.50% at $10 million AUM. That means the annual fee might be $10,000 at $1 million AUM or $50,000 with $10 million in AUM. Less commonly, wealth managers charge a fixed annual fee or an hourly rate for their services.

SmartAdvisor by SmartAsset

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SmartAdvisor by SmartAsset

Why SmartAdvisor

Leveraging SmartAsset’s network of millions of investors, SmartAdvisor will connect you with up to three fiduciary financial advisors based on geographic location, amount of investable assets, and whether both the user and the personal advisor are willing to work remotely.

How to find a good wealth manager

An online aggregator is an easy way to search for and compare wealth managers. For example, you can take a short online questionnaire at SmartAsset to get matched with prescreened financial advisors in your area. You can review your matches, set up interviews, and select an advisor matching your needs and preferences. Getting references from friends, family, colleagues, and other business associates is also helpful.

How to choose a wealth manager

Choosing a wealth manager can be one of your most important financial decisions. After all, your wealth manager will be charged with growing and protecting your wealth (potentially for decades) and ensuring that you leave behind a legacy for your loved ones. As such, it's critical that you spend the time and effort to make a well-informed decision. Here are five tips from SmartAsset to follow when choosing a wealth manager (or wealth management firm) to handle your money.

1. Ask about the types of clients the firm works with. Are its clients in financial situations similar to yours? That can give you a sense of whether their expertise aligns with your needs.
2. Compare each firm's services. Some firms specialize in specific services, such as investment management. Be certain that the firm's offerings align with your goals and needs and that you'll receive tailored (not cookie-cutter) advice.
3. Review each firm's fees. Wealth managers don't work for free, and you might pay tens of thousands of dollars a year for their services. Consider how the fees work—and the value you'll get for what you pay.
4. Find out how each firm communicates with clients. You may only need to speak with your wealth manager occasionally, but you should be able to reach them in a pinch.
5. Do a background check. A wealth management firm might have billions in AUM, but that doesn't guarantee how well it serves its clients. Read reviews from the Better Business Bureau (BBB) and other consumer sites and check each firm's records with the Securities and Exchange Commission (SEC).

Alternatives to wealth management

If wealth management isn't right for you, you have other options for getting financial advice.

Robo-advisors

Robo-advisors automate investment management using algorithms to build and manage a portfolio based on your risk tolerance and goals. Because robo-advisors use software instead of people to make decisions, they can charge lower fees than other types of financial advising. Using a robo-advisor may or may not give you the option to discuss your situation with a human advisor, as well.

M1 Finance is a low-cost robo-advisor for self-directed investors wanting a single app to manage banking, borrowing, and investing in one place. There are no commissions or account management fees. Dynamic rebalancing automatically puts deposits into underweight segments of your portfolio—and sells overweight portions first.

M1 Finance

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M1 Finance

Fees

$3.00

Minimum amount

$100 for brokerage accounts and $500 for retirement accounts

Special offer

Tax-optimized investing platforms

If you are a high-income earner, you can opt for tools which will ensure the highest returns by maxing out your tax-advantaged accounts. Playbook provides both automated investing and financial advice and will find the earnings and tax opportunities you're missing for all of your bank accounts.

Playbook

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Playbook

Why Playbook?

Playbook empowers high earners to optimize returns through strategic tax planning, crafting a financial plan and routing your funds into the most advantageous accounts.

Fees

Free trial: 7 days

Essential: $19/month (best for assets under $29K)

Plus: $59/month (best for assets over $29K)

Financial planning and budgeting apps

If you're more of a do-it-yourselfer, you can find numerous apps to help you budget, plan your finances, and manage your taxes. Here are three apps to consider:

Cost	$2.99 a month	$14.99 a month or $99 a year
Promotion	LIMITED TIME 3-month free trial to existing Mint users	Free 30-day trial and 50% off your first year with the code MINT50
Features	Starts with tracking expenses to build a personalized budget based on your preferences, like zero-based budgeting or 50/30/20	Budget creation with or without a partner (you can even invite your financial advisor) and also track investments
Links to accounts	Yes	Yes
	View Offer	View Offer

Monarch. The Monarch personal finance app lets you track all your account balances, transactions, and investments in one place. You can also set up a budget to automatically monitor your spending, so you can stay on track and reach your financial goals faster. Plans start at $8.33 per month. Monarch is currently offering a free 30-day trial and 50% off your first year with the code MINT50.

Simplifi. Simplifi by Quicken is a detailed budgeting app connecting all your accounts to provide a bird's-eye view of your finances. You can develop a spending budget, add multiple savings goals, and track your progress. Plans start at $2.39 per month. You can now benefit from a 3-month free trial for existing Mint users.

Online wealth management firms and trading platforms

Some online trading platforms offer services with lower investment minimums and fees than traditional wealth management firms. Several options to consider include:

Empower Budgeting App

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Empower Budgeting App

Fees

Free

Features

Tracks net worth, budgeting, and automatic categorization; you can add investment management services for an additional cost

Links to accounts

Yes

Empower. Empower is a digital wealth manager that aligns more with a traditional financial advisor than a robo-advisor. You get access to human advisors who create portfolios that suit your risk tolerance and goals. Empower offers three tiers of service based on your account size, with different management fees and perks at each level.

Beginners

J.P. Morgan Self Directed Investing

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Beginners

J.P. Morgan Self Directed Investing

Online trading fees

$0 stock & ETF trades; $0.65/contract options trades; $0 mutual funds trades

Account minimum

$0

Promotion

Get up to $700 when you open & fund an account with qualifying new money. Offer expires 1/23/2025.

Disclosure

INVESTMENT AND INSURANCE PRODUCTS ARE: NOT A DEPOSIT • NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE

J.P. Morgan Self-Directed Investing. J.P Morgan Self-Directed Investing is an online trading platform with zero commissions and no account minimums. The app connects to all Chase accounts, which can be a plus if you're already a Chase customer. For an automated experience, consider J.P. Morgan Automated Investing.

Active traders

TradeStation

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Active traders

TradeStation

Online trading fees

$0 stock & ETF trades; $0.60/contract options trades; $1.50/contract futures trades;$14.95 mutual fund trades

Account minimum

$0

Promotion

Cash bonuses starting at $150

TradeStation. TradeStation is widely considered to be one of the best trading platforms available. It's designed for self-directed traders and investors who want advanced charting, technical analysis tools, and trade automation capabilities. TradeStation doesn't offer advice or recommendations, but you'll find ample tools and resources if you have the expertise to manage your own finances.

Index funds

An index fund is a security that tracks a specific market index, such as the S&P 500. These funds offer a low-cost and easy way to build a diversified portfolio. You can invest in an index fund through an exchange-traded fund (ETF) or index mutual fund, a standard option in employer-sponsored retirement plans. Index funds tend to have low fees and minimum deposits, making them a good bet for most investors.

TIME Stamp: When should you hire a wealth manager?

The decision to use a wealth manager depends on your financial situation, goals, and expertise. You might not need a wealth manager if you have clear goals and are confident you can create and implement strategies to protect and grow your wealth. However, a wealth manager may be a good idea if you have substantial assets, would benefit from an expert, and have questions you need help answering. A wealth manager also makes sense if you don't have the time, interest, or expertise to manage your own wealth.

Frequently asked questions (FAQs)

What's the difference between asset management and wealth management?

Asset management focuses on finding the best investments to grow your wealth and deciding how to allocate them in your portfolio. Wealth managers take a broader view of your financial situation to grow and protect your wealth over the long term, using strategies for tax planning, insurance, retirement planning, estate planning, legacy planning, charitable giving, and more.

How do wealth managers get paid?

Wealth managers usually charge a percentage of the assets they manage for you, typically up to about 1% annually. If you have $1 million worth of investments, a 1% fee comes out to $10,000 per year. That may sound like a lot, but a good wealth manager can be well worth the cost, especially if you have substantial assets or a complicated financial situation.

What's the difference between a wealth manager and a financial planner?

Wealth managers generally work with high- and ultra-high-net-worth individuals and families. They focus on growing and preserving wealth over the long term through complex tax planning, estate planning, and risk management strategies.

Financial planners work with people of all income levels to recommend ways to meet various financial goals, from saving for a short-term goal to building a nest egg. If your finances aren’t too complex, you might get away with meeting a financial planner once a year (think of it as an annual financial checkup). You can also set up a one-time consultation with a planner if you want specific advice, such as where to invest a bonus you received at work.

**INVESTMENT AND INSURANCE PRODUCTS ARE: NOT A DEPOSIT • NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE**