Wealth management services are some of the most sophisticated and comprehensive financial services available. While financial planning services can help with individual financial issues and wealth management services usually deal with investments, wealth management can include every part of a person’s finances, from taxes to estate planning, charitable giving and more. But should you be paying for wealth management services? This will depend on your specific financial situation, so it’s important to make sure it fits with your overall financial plan and goals. If you decide you want wealth management, SmartAsset’s free matching tool can help you find a financial advisor.
What is Wealth Management?
Wealth management is a comprehensive financial service that not only offers clients investment advice, but also helps with a wide range of economic and financial issues that affect different parts of a client’s financial life.
Wealth managers typically develop complex and holistic financial plans that detail information about investments, taxes, charitable giving, estate planning, and any other related needs or goals. In turn, they typically manage your investments with your long-term goals in mind.
Wealth managers also help set, review and update goals, rebalance investment portfolios and assess whether clients need other services to protect their wealth. This could include managing charitable donations, tax obligations and business plans.
Due to its comprehensive nature, wealth management is usually reserved for individuals who are at least above the high net worth threshold. This is generally considered to be someone who has at least $750,000 in investable assets or a net worth of $1.5 million.
Who can access wealth management services?
Wealth management services are not usually available to everyone. Due to their global nature, businesses can require high minimums such as $500,000 or $1 million. In fact, they may even charge additional fees to cover the cost of wealth management services since they are comprehensive.
For reference, financial advisors at most firms typically charge fees based on a percentage of assets under management (AUM) for portfolio management services. These rates are generally around 1% of AUM per year, although rates typically drop as you invest more in the company. Managers may also charge customers in other ways, which may include hourly fees, flat fees, commissions, and performance-based fees.
While the specific amount you’ll pay for wealth management will vary greatly by firm, you’ll likely need at least $1 million. For example, Fidelity requires $10 million in investable assets for private wealth management services. However, it also has a simpler service with the company having a lower minimum of $250,000.
When should you consider wealth management?
Ultimately, whether wealth management and other financial planning services are worth it depends on your specific financial situation. For example, are you looking to build an estate plan, plan for retirement and invest at the same time? Then the holistic nature of wealth management may be for you.
Let’s say you have $1 million in investable assets, you’ve set up a trust for your children and grandchildren, and you’re the beneficiary of your parents’ estate. A wealth manager can help you invest your funds, provide trust and estate planning services, and work with you on a financial plan to minimize taxes and maximize income.
Wealth management services generally benefit clients more as they acquire more wealth to invest or manage. But this is not a hard and fast rule. As we mentioned earlier, some companies may offer customers simplified services at lower minimums.
In addition, it is also worth noting that since wealth managers usually combine different strategies to protect clients’ wealth, these integrated services could benefit you if you do not have enough time or resources to manage all aspects of your financial life. Of course, there is a fee for this hands-off approach. In other words, decide based on your own needs whether you think a wealth manager is necessary.
Wealth managers can bring both insight and valuable experience to your assets. However, wealth management services are often only available to high net worth individuals. However, this is not always the case, so do your research on companies in your area to find a good match.
Clients often engage in wealth management when they have complex financial situations that require general services. These could include philanthropic giving, tax mitigation, investment management and estate planning, among others. There are few other services available that are as widespread, making them a strong offering for those who need them. But as we mentioned above, each person’s situation is unique, so decide for yourself if it’s worth it.
Wealth management tips
If you are considering working with a wealth manager or financial advisor, be sure to explore your options. However, finding the right financial advisor doesn’t have to be difficult. SmartAsset’s free tool matches you with up to three financial advisors in your area in just five minutes. Get started now.
Wealth management is not for everyone. Many people invest and manage their finances on their own. However, if you choose this path, it pays to be well prepared. SmartAsset has you covered on that front as well. Try our investment calculator and get started with smarter investments today.
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