Investment Minimums of Wealth Management Firms
Overview of Wealth Management
Wealth management is a professional service that combines financial and investment advice, retirement income planning, insurance assessments, and estate planning. It may include accounting, legal, tax services, and philanthropic planning.
Wealth management aims to develop an integrated plan for reaching your long-term financial goals. When crafting strategies tailored to your needs, it analyzes all aspects of your finances, risk tolerance, and personal values.
High-net-worth individuals and families typically avail of wealth management services instead of trying to integrate advice from different professionals. It is also more cost-efficient in the long run than working with separate advisors for each financial, investment, or planning need.
Typical Investment Minimums for Wealth Management Firms
Requirements vary according to the specific services provided, the complexity of your financial needs and goals, and the firm itself. Most require a minimum amount of investable assets to avail of their services. At the same time, others also charge on an hourly or per-project basis.
Generally, clients need around $2 million to $5 million in investable assets to work with wealth management firms. For any investments lower than this, the client may be better served by availing of more affordable, individualized financial services.
Other Costs of Wealth Management Services
Wealth management firms typically charge a percentage of your assets under management (AUM) as their fee. This is paid annually and calculated based on your account size and can range anywhere from 0.25% to 2%. AUM fees usually get lower as you invest more with the company.
Some firms may also charge fixed fees, hourly charges, or annual retainers for certain services, such as estate planning or tax return preparation.
In addition to fees charged by wealth management firms, you might also have to pay other costs related to trading and investing, including transaction fees, performance-based fees, broker commissions, mutual fund loads, or exchange-traded fund (ETF) expenses.
Investment Minimums of Popular Wealth Management Firms
There are hundreds of wealth management firms in the market. Discussed below are five of the most popular ones:
Merrill Lynch Wealth Management
Merrill Lynch & Co. is known for its investment banking activity, although it currently focuses on its wealth management division. It is an investment advisory firm under Bank of America, one of the largest commercial banks in the world.
As a company, Merrill Lynch boasts of no minimum account requirements for its services. Nonetheless, individual wealth managers set their limits and have typically catered to high-net-worth clients with assets starting from $1 million and above.
They charge two fees under the Investor Advisory Program, levied monthly from clients based on asset market value. The first, the Merrill Lynch Fee Rate, charges a maximum AUM fee of 2.2% for accounts below $5 million, which drops as investable assets go up.
The Style Manager Strategy charges another fee, an expense rate of at most 0.65% of assets depending on the client’s chosen strategy. Additional fees may be charged for custodial costs and other investment types. Merrill Lynch does not have performance-based fees.
Morgan Stanley Wealth Management
Morgan Stanley Wealth Management is a multinational financial services business in the U.S. specializing in retail brokerage. It is the wealth management division of the investment bank Morgan Stanley.
Morgan Stanley has a minimum account requirement of $250,000 or higher and charges fees on a sliding scale.
Its minimum annual basic fee is either $250 or 0.2% of assets, whichever is lower. Fees are charged quarterly.
The company also considers the type of investments a client makes and charges account maintenance, cash management, and investment-specific fees.
Notably, its Private Wealth Management division serves ultra-high-net-worth individuals. These people have upwards of $30 million in their names and are charged a maximum of a 2% annual fee plus an additional platform fee of 0.045% of assets.
Morgan Stanley Wealth Management also caters to professional athletes, coaches, actors, directors, producers, singers, and other celebrities under the Global Sports and Entertainment division.
UBS Wealth Management
UBS is a global, diversified provider of financial services with offices in Basel and Zurich. UBS is involved in almost all major financial activities, including investment banking, wealth management, retail and commercial banking, and investment management.
UBS caters to smaller investors with minimum account requirements ranging from $5,000 to $25,000, depending on the specific program. For example, the Advice Portfolio Program starts at $5,000, while the Managed Portfolio Program requires a minimum of $25,000 in assets.
A separate division, UBS Asset Management, provides services to high-net-worth individuals with more than $15 million in assets. This program is non-discretionary, meaning the clients retain control over their investments, and UBS acts as an advisor and manager.
Generally, UBS charges a maximum annual 1.25% to 2.5% AUM fee, contingent on the investment strategy employed and paid quarterly.
Wells Fargo Wealth Management
Wells Fargo & Company has a broad range of service offerings from investment to retirement and wealth management. It is a global financial services company with several branches in the U.S.
Wells Fargo requires no rigid minimum account size but generally caters to clients with at least $250,000 in investable assets. Clients may opt for discretionary or non-discretionary investment strategies depending on their needs and preferences.
Its division, Wells Fargo Private Bank, serves clients with more than $1 million in assets and offers tailored services such as access to private bankers, trust advisors, and tax specialists.
The firm charges quarterly AUM fees for investment advice and trading costs, starting from 1.5% of assets to 2.5%. For some programs, AUM fees are paid to the specific wealth manager, while commissions are paid to the company for its services.
Baird Private Wealth Management
Baird is a full-service wealth management, employee-owned firm with offices around the U.S. and some branches internationally.
Baird caters to all clients, regardless of net worth. Some of its financial planning services accept minimums of as low as $5,000. However, access to private banking and wealth management services starts at $1 million.
The company charges a fee of 1% to 2.5% of assets based on the type of service clients require. Fees are paid quarterly and may include account administration fees, trading costs, or other expenses related to services offered by Baird Private Wealth Management.
Depending on the strategy type, annual portfolio fees may also be charged, ranging from 0.16% to 0.6% of assets.
Factors to Consider in Choosing a Wealth Management Firm
Given the variety of firms in the market, it can be hard to determine which wealth management firm is best for you. To aid in your decision-making, consider the following factors:
Types of Clients
Different wealth management firms specialize in various clients, from high-net-worth individuals and families to smaller accounts. Individual wealth managers also have their preferences and ideal types.
It is essential to know the firm’s experience level regarding the kind of client you are and make sure their services match your needs.
Wealth management services provided will vary from firm to firm. Some firms focus solely on investments, while others may offer a more comprehensive array of services such as financial planning, tax preparation, estate planning, and retirement planning.
Research and compare the types of services each wealth management firm offers, their specific programs and strategies, and their general investment philosophies. Ensure that they match your own investment goals.
Most wealth management firms use a fee-based structure, meaning they charge a flat or percentage fee for managing your assets. Some may offer commission-based services or combination models that combine fees and commissions.
They also typically have tiered fee structures that charge lesser fees as the assets in your account increase. Knowing exactly how the firm is compensated will help ensure that you understand any potential conflicts of interest or hidden fees associated with their services.
You should look for a firm that offers services tailored to your needs and schedule. They should be reachable during and after regular business hours if needed.
Some firms may offer virtual meetings or video conferencing options, while others may have more local offices where you can meet with advisors in person. Research the firm’s access and convenience before committing to wealth management services.
Finally, look into the firm’s reputation. You may use the Securities and Exchange Commission (SEC) Investment Adviser Public Disclosure (IAPD) website and the Financial Industry Regulatory Authority (FINRA) BrokerCheck tool to look at a firm’s records, history, and regulatory actions.
Additionally, research past awards a particular firm might have received. You may also ask former clients about the quality of service they received or read any relevant reviews and ratings found in newspapers, industry publications, or websites.
The Bottom Line
Investment minimums of wealth management firms differ from firm to firm and the specific type of program or strategy they offer. Some accept as low as $5,000, while certain divisions within a firm cater only to $30 million-worth individuals.
Fee structures also vary, though firms generally charge less as assets increase.
Aside from investment minimums, consider a firm’s ideal client types, compensation structure, manager availability, and reputation when choosing who you would like to manage your wealth.
By evaluating different options and doing your due diligence before availing of wealth management services, you can ensure that you get quality service that aligns with your investment goals and objectives.
Investment Minimums of Wealth Management Firms FAQs
About the Author
True Tamplin, BSc, CEPF®
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.