Despite common misconceptions, the terms financial advisor and wealth manager are not interchangeable. There are many distinct differences between the two, including the type of clientele they assist, the selection of services, and each role’s job requirements.
What Is A Wealth Manager?
Wealth management is a specialized form of financial advisory that operates in many areas, such as investing, taxes, estate planning and other services to help grow a client’s wealth. A wealth manager generally only accepts clients with a high net worth or an ultra-high net worth.
Wealth management advisor are essentially a subset of financial advisors. The main component that sets them apart is the clientele. Most wealth managers only accept clients with a net worth of at least $250,000, while some wealth managers only accept clients with a net worth of more than one million.
Requirements To Be A Wealth Manager
There is no standard of qualifications to become a wealth management advisor. However, wealth managers are expected to have an educational and career background in the area of finance. A college degree in finance, mathematics, accounting or economics is common among wealth managers. Some wealth management advisor may hold a law degree, master’s degree or other certification.
It is also recommended that a wealth manager become a Certified Private Wealth Advisor (CPWA) and a Certified Financial Planner (CFP). Successful wealth managers have the ability to explain complex information, understand customer relations tactics, and possess good presentation and negotiation skills.
Wealth Manager Services
Wealth managers offer a wide range of financial services that may help clients retain and build their wealth. This involves services like investment management that consist of the development of a diverse investment portfolio that aligns with the clients’ goals. Another common service is tax and estate planning that aims to avoid the loss of wealth to taxes.
Wealth managers also provide risk mitigation, a service that helps minimize financial risks, such as economic losses that result from accidents. Wealthy clients that give back to communities and organizations may seek services pertaining to charitable giving. Charitable giving often involves tax considerations that must be strategically resolved.
What Is A Financial Advisor?
Financial advisors provide financial advice to clients in exchange for compensation. Much like wealth managers, financial advisors offer a host of services like investment management, estate planning and tax planning. Financial advisor is a fairly generic term and many types of financial experts fall into this category, such as stockbrokers, tax preparers, insurance agents and investment managers.
One of the most significant differences between a wealth manager and a financial advisor is that most financial advisors work with clientele of any income level. A financial advisor’s main goals are to create strategies for eliminating financial risks while building wealth over time. A financial advisor will often create a plan to help clients work toward achieving their financial goals.
Requirements To Be A Financial Advisor
Due to the broad nature of financial advisor careers, the requirements to acquire a job in this industry can differ significantly. Most professionals that offer financial planning services are a CFPs. At the same time, some may acquire the certification to become a chartered financial counselor (ChFC), a financial risk manager (FRM) or a chartered financial analyst (CFA).
Some firms will not hire a financial advisor without a bachelor’s degree. Majors in finance, business, economics or statistics are generally accepted. A financial advisor may be a generalist and offer services in many areas or specialize in a certain area, such as estate planning, taxes or risk management.
Financial Advisor Services
Financial advisors offer many of the same services as a wealth manager but on a lesser scale. This typically includes financial planning, investment management and, in some cases, wealth management. A financial advisor may help clients monitor their portfolio and design and implement investment strategies.
Most financial advisors also offer education savings planning, debt management, cash flow analysis, charitable planning, tax planning, emergency funds planning and estate planning. They can also assist entrepreneurs with small business financial planning.
Do You Need A Financial Advisor Or A Wealth Manager?
The type of financial professional that a person requires will ultimately depend on their unique situation. Clients with a high net worth or ultra-high net worth should consider the services of a wealth manager. Every wealth management firm has a minimum asset requirement for opening an account, so clients must check first to see if they qualify.
Work With Wealth Managers From Campbell Wealth Management
Working with an experienced wealth manager can be highly advantageous for affluent clients that want comprehensive management of their finances. At Campbell Wealth Management, a team of high-qualified wealth management advisors helps clients ages 55 and older build secure financial futures through a wide range of financial and investment services. Request a consultation today to speak with an experienced wealth manager.