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Getting a handle on your money is often a team effort. It’s important to get advice from experts when it comes to deciding where to invest your money, how to grow and preserve your wealth and even how to manage taxes as effectively as possible.
That’s where professionals like wealth managers and financial advisors come in. People often use these terms interchangeably to describe professionals who work with a client’s money and provide financial advice, but there are key differences between the two. Here’s what you need to know.
A wealth manager is a financial professional who advises almost exclusively individuals with a high net worth — this is perhaps the biggest difference between a wealth manager and a financial advisor.
Wealth managers can create financial plans that encompass estate planning, investment strategies, property, retirement, divorce and more.
Some wealth managers require you to have a minimum amount of assets before taking you on as a client. For instance, Charles Schwab offers a wealth advisory service with a $1 million minimum.
Fidelity has a wealth management service with an eligibility requirement of at least $250,000 managed through Fidelity Wealth Services. But if you require a personal wealth management team of financial experts, you’ll need to have at least $2 million managed by Fidelity Wealth Services and at least $10 million in total investable assets.
So as you can see, the minimum requirements are quite high, especially if you require a team working on your behalf as opposed to just one individual.
Most financial institutions also offer wealth management services in addition to their other financial offerings, so you should check if your current institution has these services (and if you qualify).
Wealth managers usually collect their fees as a percentage of the assets they manage.
A financial advisor offers guidance on a variety of topics including retirement, tax planning, insurance, saving and estate planning. Creating an investment strategy and providing investment advice is one of the key services financial advisors provide. Financial advisors are also licensed to work with and advise on specific kinds of securities.
Financial advisors tend to work with a clientele that’s more economically diverse than those of wealth managers. However, some financial institutions may still require a minimum amount for you to use their services, even if those minimums are much humbler than what a typical wealth manager wants.
The fees for a financial advisor can be collected as a percentage of your assets being managed or as a commission on in-house insurance and investment products. Another way some advisors charge fees is as a flat or hourly rate that doesn’t take the assets being managed into consideration at all.
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Choosing a financial professional to help you reach your goals is a deeply personal decision — factors such as fee structure, investment and planning philosophy, and reputation should carry far more weight than a semi-arbitrary label like “wealth manager” or “financial advisor.”
That said, broadly speaking a wealth manager may have the experience and expertise to better help you if you have a high net worth, while a financial advisor can provide great service for a more accessible price.
If you don’t meet the minimums for either profession and still want some guidance on your financial picture and investment goals, you could also look into a robo-advisor.
Robo-advisors are a popular type of financial service since they collect information about your investment preferences, risk tolerance, goals and time horizon and make portfolio recommendations that adjust automatically as your needs and time go on. Betterment and Wealthfront are two strong contenders for robo-advising services.
Betterment
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Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. For example, Betterment doesn’t require clients to maintain a minimum investment account balance, but there is a ACH deposit minimum of $10. Premium Investing requires a $100,000 minimum balance.
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Fees
Fees may vary depending on the investment vehicle selected, account balances, etc. Click here for details.
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Investment vehicles
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Investment options
Stocks, bonds, ETFs and cash
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Educational resources
Betterment offers retirement and other education materials
Terms apply. Does not apply to crypto asset portfolios.
Wealthfront
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Minimum deposit and balance
Minimum deposit and balance requirements may vary depending on the investment vehicle selected. $500 minimum deposit for investment accounts
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Fees
Fees may vary depending on the investment vehicle selected. Zero account, transfer, trading or commission fees (fund ratios may apply). Wealthfront annual management advisory fee is 0.25% of your account balance
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Bonus
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Investment vehicles
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Investment options
Stocks, bonds, ETFs and cash. Additional asset classes to your portfolio include real estate, natural resources and dividend stocks
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Educational resources
Offers free financial planning for college planning, retirement and homebuying
Wealth managers and financial advisors may sometimes seem like they can be used interchangeably but wealth managers tend to work with richer clients. Even if you don’t have enough assets to work with a wealth manager or financial advisor, you can still seek other types of services that can help you reach your goals, such as a robo-advisor.
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every investment article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of investment products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.
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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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