Wealth Manager vs Financial Advisor

What Is a Wealth Manager?

A wealth manager is a professional who helps individuals and families manage their finances. They typically have a more holistic approach to financial planning and can provide advice on everything from investing to estate planning.  Wealth managers often have backgrounds in finance or accounting, and some are certified financial planners (CFPs). They work with clients to create a financial plan and then help to execute that plan.

What Wealth Managers Do

Wealth managers typically do the following:

  • Advise clients on financial planning, including investment choices, retirement planning, and estate planning
  • Help clients grow and protect their assets
  • Review client’s current financial situation and goals
  • Recommend solutions to meet client’s needs
  • Manage client portfolios
  • Provide ongoing advice and monitoring 

What Is a Financial Advisor?

A financial advisor is someone who helps people invest their money. They typically have a more technical approach to investment planning and can provide advice on specific investments, asset allocation, and retirement planning.  Financial advisors typically have backgrounds in investing or economics. They work with clients to understand their financial goals and then recommend investments that will help them achieve those goals.

What Financial Advisors Do

Financial Advisors typically do the following:

  • Advise clients on investment choices, including stocks, bonds, mutual funds, and exchange-traded funds (ETFs)
  • Help clients save for long-term goals, such as retirement
  • Advise clients on asset allocation, or how to spread their investment money across different types of assets to reduce risk
  • Review client’s current financial situation and goals
  • Recommend solutions to meet client’s needs
  • Manage client portfolios 
  • Provide ongoing advice and monitoring

Similarities of Wealth Managers and Financial Advisors

Although the roles of wealth managers and financial advisors differ, there are some similarities.  Both typically:

  • Advise clients on financial planning
  • Help clients grow and protect their assets
  • Review client’s current financial situation and goals
  • Recommend solutions to meet client’s needs
  • Manage client portfolios

Differences Between Wealth Managers and Financial Advisors

Wealth managers and financial advisors can have different specialties. 

Wealth managers typically handle the following: 

  • Investment planning for retirement, education, etc. 
  • Retirement planning
  • Estate planning
  • Tax planning 

Financial advisors typically handle the following: 

  • Investment advice for specific securities or asset classes
  • Asset allocation
  • Investment research
  • Financial planning for large purchases, such as a home or car 

How Do Wealth Managers and Financial Advisors Help?

Some people may only need a financial advisor, while others may benefit from working with both a wealth manager and a financial advisor. Here are some factors to consider:

Wealth Manager 

You may want to work with a wealth manager if you have complex financial needs.  For example, if you are thinking about entering into real estate or starting your own business, you might need help with retirement planning or developing an investment strategy, then a wealth manager would be the right choice for you. Wealth managers can also support clients who want someone to actively manage their investments versus finding an investment solution.  Wealth managers can help review your current financial plan and invest in new opportunities, while also ensuring that you don’t get out of balance with your savings goals. 

Financial Advisor 

You may benefit from working with a financial advisor if you are not sure how to start planning for your future or if you are interested in a more passive approach to your investments.  Financial advisors can make recommendations for specific securities or asset classes, but they don’t actively manage portfolios.  Another benefit of working with a financial advisor is that they will help you diversify your portfolio and minimize the risks associated with any one investment.

Who Should You Work With? 

Most people will benefit from working with both a wealth manager and a financial advisor.  A wealth manager can help with long-term planning while financial advisors can provide recommendations on specific investments or asset allocation that best suit your needs.  To find out which type of professional is right for you, consider the following questions:

  1. What are your financial goals?
  2. Do you have a complex financial situation?
  3. Do you want someone to actively manage your investments?
  4. How much do you want to pay for services?
  5. What type of investment experience do you have?
  6. Are you looking for general financial planning advice or just investment advice?
  7. Are you comfortable making your own investment decisions, or do you want advice on specific securities or asset classes?

A financial advisor can provide recommendations for specific investments or asset allocation.  A wealth manager has the experience of managing client portfolios, while also helping with long-term planning, estate planning, and tax planning. However, a wealth manager will typically not recommend specific securities or asset classes.

Things to Look For When Choosing Which One Is Right for You

When looking for a wealth manager or financial advisor, consider the following:

Credentials 

Wealth managers and financial advisors should be licensed and registered with the Financial Industry Regulatory Authority (FINRA) and/or the Securities and Exchange Commission (SEC). 

Experience 

Both wealth managers and financial advisors should have experience in the industry.  Reviews  Check online reviews to get an idea of the quality of service you can expect. 

Interview Process 

When meeting with a wealth manager or financial advisor, ask questions about their experience, what services they offer, and how they charge for their services. This will help you make an informed decision about who is right for you. Learn more about the different kinds of financial advisors and the type of services they offer. Read more in this article: Understanding Financial Advisor Titles

Conclusion 

Most people will benefit from working with both a wealth manager and a financial advisor.  A wealth manager can help with long-term planning while financial advisors can provide recommendations on specific investments or asset allocation that best suit your needs.  Consider your financial goals and experience to make the best decision for you.

A wealth manager is a professional who can provide advice on investments, estate planning, and tax planning. Wealth managers typically have experience in the industry and are registered with FINRA and/or the SEC.
A financial advisor is a professional who can provide recommendations for specific investments or asset allocation. Financial advisors typically have experience in the industry and are registered with FINRA and/or the SEC.
A wealth manager typically has more experience and offers services such as estate planning, tax planning, and investment management. Financial advisors offer general investment advice but do not typically offer the same breadth of services.
Most people will benefit from working with both a wealth manager and a financial advisor. A wealth manager can help with long-term planning while financial advisors can provide recommendations on specific investments or asset allocation.
Check online reviews to get an idea of the quality of service you can expect and ensure that they are licensed and registered. Interview the professional to ask about their experience, what services they offer, and how they charge for their services.

True Tamplin, BSc, CEPF®

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.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.