What You Need To Know About Wealth Advisors

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When it comes to your wealth, growing it and protecting it should be your main concerns. A wealth advisor—or wealth manager—is a licensed financial advisor who helps high-net-worth individuals (HNWIs) and families manage their financial wealth.

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Wealth advisors work with clients to develop investment strategies, plan for retirement and create wealth-building plans. They may also provide guidance on estate planning and tax issues.

What Do Wealth Advisors Do?

Wealth advisors provide financial planning and investment management services to individuals with high net worths. They create wealth management plans that consider both their clients’ short- and long-term financial goals. Many wealth advisors also provide tax planning and estate planning services that benefit HNW individuals.

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Financial Planner vs Wealth Advisor: What’s the Difference?

A financial planner is a broad term that describes a professional who provides comprehensive financial planning services to individuals and families. Financial planners can help with a broad range of financial services including budgeting, saving for retirement, investing and other aspects of your finances.

Wealth advisors, on the other hand, focus specifically on wealth management—as it relates to both cash and other assets—and investing. They work with clients who already have high net worths (typically in the millions) and can provide more specialized services like tax planning and estate planning.

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If you have a high net worth, a financial advisor can still help you, but they won’t typically offer the breadth and depth of services available through a wealth advisor.

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What Are the Qualifications of a Wealth Advisor?

Although a wealth advisor is a fairly generic term that can be applied to other types of financial advisors, if you’re really looking for someone who can provide you with the best advice, you might want to seek out certain qualifications.

To start, most wealth advisors have a bachelor’s degree in a finance-related field. Many also hold advanced degrees, such as a master’s in business administration (MBA), or certifications such as a chartered financial analyst (CFA), certified financial planner (CFP) or certified public accountant (CPA).

In addition, a wealth advisor may hold Series 7, 65 or 66 licenses from the Financial Industry Regulatory Authority (FINRA) and must complete continuing education courses on an ongoing basis to maintain these licenses.

Many wealth advisors, in addition to holding degrees, certifications and possibly licenses to sell securities, are often registered investment advisors. This allows them to recommend investments and investment strategies to clients and to charge a fee for managing client assets.

Wealth Advisory Services

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Depending on their licenses, certifications and experience, wealth advisors offer a wide range of services. Some of the most common include:

  • Investment management. Wealth advisors work with their clients to develop investment portfolios that are aligned with their goals and risk tolerance. Advisors also provide ongoing advice and guidance on how to adjust a portfolio as needed. This includes choosing appropriate investments, monitoring performance and rebalancing portfolios.
  • Retirement planning. Wealth advisors can help clients plan for retirement by estimating how much money they will need to maintain their lifestyle. They also can help clients develop a retirement savings plan and invest in the right mix of assets.
  • Tax planning. Wealth advisors can help clients minimize their tax liability with strategies such as asset location, tax-loss harvesting and strategic asset transfer.
  • Estate planning. Wealth advisors often help clients create an estate plan that includes wills, trusts and other legal documents. They also may identify ways to reduce gift or estate taxes.
  • Insurance planning. Wealth advisors can help clients choose the right type and amount of insurance coverage. This also may involve reviewing existing policies to make sure they are still appropriate.

How Much Do Wealth Advisors Cost?

Wealth advisors typically charge either an hourly fee or a flat fee for their services. Some wealth advisors also charge a percentage of the assets (usually ranging from 1% to 3%, which may be tiered based on account size) they manage for their clients.

Many wealth advisors also earn commissions on certain products they sell, such as life insurance. When considering a wealth advisor, be sure to ask about all fees that may be charged.

Are Wealth Advisory Services Worth It?

Wealth advisory services can be very beneficial for individuals with a HNW, but it’s typical for firms to require a minimum of $2 to $5 million in investable assets to start. With that amount of wealth, a wealth advisor can help you create a wealth management plan that meets your specific financial goals, as well as provide valuable insight and advice on investing, tax planning and estate planning.

How to Find a Wealth Advisor

If you’re interested in finding a wealth advisor, follow these steps to start your search:

  1. Check local listings. Most wealth advisors work with clients in their area. You can search for wealth advisors near you by using a directory such as the CFP Board’s Find a CFP Professional tool. Other organizations, such as the Financial Planning Association (FPA) and the National Association of Personal Financial Advisors (NAPFA), have directories as well. Your bank may also offer wealth advisor services.
  2. Scope out robo-advisors. These platforms provide automated, online financial planning services. They can be a good option if you’re looking for a low-cost wealth advisor and don’t need personal service.
  3. Get referrals. Ask family and friends for referrals to advisors they have used in the past. You also can ask your financial planner, attorney or accountant for recommendations.

Once you have some advisors in mind, consider the following for each:

  1. Fee-only wealth advisors may offer more well-rounded advice. Fee-only wealth advisors are not paid commissions for selling products. This means they are more likely to give unbiased advice that is in your best interests. And, they’re typically required to act as fiduciaries, requiring them to put their clients’ interests first.
  2. Search through the list for the right credentials. Once you compile a list of potential wealth advisors, research their backgrounds. Make sure the wealth advisor is properly licensed and registered with the SEC or state securities regulator. You can also check their background using FINRA’s BrokerCheck tool.
  3. Interview multiple advisors. After narrowing down your list of advisors and confirming their credentials, take some time to meet with potential candidates. Use this opportunity to ask pointed questions about their offerings and philosophy and try to determine whom you would be comfortable working with.

What to Consider When Interviewing Financial Wealth Advisors

When picking a wealth advisor to work with, it’s important to find one that is a good fit for you and your family.

You need to not only understand their investment philosophy but also get along with them personally. This advisor is going to be responsible for giving you serious advice, and it’s important that you hold their opinion in high regard.

Here are some things to consider when choosing a wealth advisor:

  • What is their investment philosophy?
  • Do they have experience working with clients like you?
  • Are they properly licensed or do they have any regulatory disclosures?
  • Do they have any specific credentials related to the services you need?
  • What are their fees and how are they structured?
  • What are their areas of expertise?
  • What is their track record in choosing investments?

With your wealth on the line, you can never be too careful when picking an advisor. The above suggestions can help.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



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