What is a Wealth Manager?

Who are Wealth Managers?

Wealth managers provide a variety of concierge financial services, mostly to high-net-worth individuals (HNWIs) and ultra-high-net-worth individuals (UHNWIs). For a fee, these services include such things as investment and financial advice, retirement and estate planning, accounting and tax services, and more.

At a time of record Chinese investment in the United States—along with stock market fluctuations, the drop in oil prices and uncertainty about the Federal Reserve’s plan to raise interest rates—it’s a “bull’s market for financial advice”[1] and the services of wealth managers are expected to be in high demand in the years ahead. Chinese investments in the U.S. hit an all-time high of $18.4 billion2 in the first half of 2016—triple the amount during the first half of 2015.

Amid this surge, many wealth managers provide holistic services to their clients, coordinating input from financial experts, along with their client’s attorney, accountant and insurance agents. When it comes to wealth management, the idea is that HNWIs and UHNWIs benefit from the services of a single manager who coordinates services to manage their client’s money and investments. Many wealth advisors offer comprehensive services, handling everything from investing client’s funds in top-performing hedge funds to handling estate planning.

For their training, many successful wealth managers have attended top-ranked colleges, have degrees in business or have a Master of Business Administration, are licensed attorneys or certified public accountants, or possess prestigious designations including Chartered Wealth Manager.

Benefits of Using a Wealth Manager?

A wealth manager develops a plan to grow their client’s wealth based on their financial goals, comfort level with risk and economic situation. Once this plan is drafted, the wealth manager meets regularly with their client to go over their goals, rebalance their portfolio and look at whether more services are needed. The goal is to become the client’s wealth manager for life.

The plan that the wealth manager creates involves more than just investment advice. It typically involves all parts of the client’s financial life, from paying the mortgage to financing educations of children to planning for retirement.

Think of a wealth manager as a coach. Coaches help individuals focus on what’s important—accelerating their success. Coaches, or wealth managers, help identify the gaps between where a person is and where they would like to be, create a safe environment for individuals to see themselves with clarity, inspire positive changes in behavior and provide the accountability and support necessary for sustained commitment to building wealth. Even the most experienced investor can benefit from the services that a wealth manager offers.

How to Find a Wealth Manager

In order to qualify for wealth management services, an investor needs to meet a net worth minimum, which fluctuates among firms. Often, the fee that wealth managers charge is a percentage of their client’s assets under management. Typically, the minimum account requirement for a high-net-worth individual is about $2 million, and the minimum amount for an ultra-high-net-worth individual is in the range of $10-$20 million.

For those seeking the best, Forbes magazine maintains an annual list of America’s Top Wealth Advisors3, who in 2016 managed $675 billion. While many of their clients are billionaires, some of these wealth advisors cater to investors with smaller portfolios. The big wirehouses—Morgan Stanley and Merrill Lynch and others—dominate the list.

In picking a wealth manager, the most important attribute to look for is the potential of developing a long-term relationship. Ask how long they have worked at the firm, what they did previously and what will happen if they leave the company.

It’s also prudent to ask how much experience they have dealing with clients, any advanced-level professional qualifications they have and their special expertise. The fees that wealth managers charge vary so it’s a good idea to ask for a “rate-card” detailing the charges.

Potential clients should ask whether the wealth manager is a Certified Financial Planner or has other qualifications. Possible clients can verify if their wealth manager is a CFP here or through the U.S. Securities and Exchange Commission site here. 

Potential clients should also ask about the wealth manager’s investment strategy. Online model portfolios will help this regard.

1 http://www.forbes.com/forbes/welcome/?toURL=http://www.forbes.com/sites/steveschaefer/2015/05/01/top-wealth-managers-2015-investing-advice/&refURL=&referrer=#20614ecf360e

2 http://www.forbes.com/sites/ellensheng/2016/07/25/chinese-investment-in-u-s-hits-record-high-of-18-4-billion-in-first-half-of-2016/#75211392b3b3


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