Wealth Management Advisor

Your Ultimate Guide to the Specialized Field of Financial Advisors

Keeping track of all the terms in the financial services industry can be challenging. That is why an individual with a high net worth or an ultra high net worth needs a top wealth management firm. This is why we’ve written an in-depth book which you can download here for free if you are looking to invest between $5 million and $500 million.

This article will teach you about top wealth management firms, what they specialize in, and why you need one.

Wealth management is not for everyone. It is not for the kid who just graduated from college. It is not for the middle-class worker who wants to save $500 a month and build up a nest egg that might approach $1 million by the time they retire. Wealth management is a specialized form of financial planning for high net worth and ultra-high net worth individuals and families.

Most wealth management firms will require minimum investment amounts beyond what the vast majority of people have. Pillar Wealth Management, for example, serves clients who have between $5 million and $500 million in liquid net worth.

If you want a detailed understanding of how wealth management – and our approach to it in particular – differs from typical financial advisors, get our signature book, The Art of Protecting Ultra-High Net Worth Portfolios and Estates, Strategies For Families worth $25 Million to $500 Million.

What Is Wealth Management?

Wealth management is, in essence, financial planning for the affluent. Through wealth management, clients can start consulting high-level financial experts to find a financial strategy that suits their wants and needs. For help choosing the best wealth advisor, refer to our free eBook guide, The Ultimate Guide to Choosing the Best Financial Advisor, For Investors With $5 Million To $500 Million in Liquid Assets.

High net worth households have more at stake when investing than typical households. It’s about the scale of potential losses and gains. For instance, when the coronavirus crossed the globe in early 2020, the stock market plunged over 40% in just a couple of months.

For an investor with $100,000, they might have lost $30,000. And that would sting a lot and probably make them pretty grumpy about the stock market. But for an upscale investor with $40 million invested in the market with no market research, they could have just lost $15 million or more. Just like that – gone. How would you feel waking up one day to learn you just lost $15 million? Not so good.

So wealth management exists as a distinct specialization because the stakes for wealthy investors are higher. What you stand to gain or lose depending on what you do with your wealth has almost nothing in common with what typical investors face.

That’s why Pillar Wealth Management often talks about ‘wealth protection.’ That’s why we put it in the title of our book mentioned earlier. Growing your wealth is important. But protecting your wealth is more important. You want both. It does little good to earn $7 million a year in growth, only to lose $20 million in a recession.

You, as an upscale investor, can do so much more with your assets than a typical person can do with theirs. You have more options. That means you have more decisions to make, each with pros and cons, risks, and rewards. Making these decisions without any counsel or objective advice usually doesn’t go as well. Most wealthy people have whole teams of advisors in various roles.

One thing wealth managers have in common with financial advisors is that both work in an advisory capacity. We are not banks. You don’t ‘deposit’ your money in a wealth management company and let them take care of it. Financial advisors and wealth managers are relationship-driven disciplines.

Wealth management isn’t just about numbers, data, and performance. It’s also about feelings and emotions related to security, achievement, and empowerment. Here are 4 unpleasant emotions you’ll feel if you don’t have a wealth manager. 

What Is Considered High Net Worth?

As time goes on, these sorts of definitions will change. And regardless of how terms like high net worth and ultra-high net worth get defined over time, each private wealth management firm will generally set its own boundaries for which clients they will work with. For now, an upscale individual has generally meant anyone with more than $1 million in liquid assets but less than $30 million. Ultra-upscale individuals refer to anyone with over $30 million. Again, as time goes on, these amounts will change.

The important term here is ‘liquid’ cash flow. If someone owns a house in a city with a high cost of living and their house is worth $800,000 and has $300,000 in various IRAs, 401ks, and other accounts, that person does not have high liquid cash flow. The house is not liquid.

For this reason, the value of the estate of a high net worth household will often be over $2 million. But you must have at least seven figures of liquid, investable cash to be considered high net worth.

What do Wealth Management Firms do?

What is included in wealth management? The essential goal is to assess each client’s personal financial situation and understand their lifestyle dreams to develop a truly customized financial plan that will allow them to achieve those dreams.

In other words, we don’t start with performance. We end with performance. Investment performance happens once we know its purposes related to your life and have created a plan to achieve those goals.

To create a customized plan, a wealth manager like Pillar will begin with a few questions. These are the foundation of everything that follows. Questions include:

• What is your ideal retirement age?

• What is your desired monthly income now?

• What is your desired income during retirement?

• What are your estate planning goals and dreams?

• What are your lifestyle hopes and dreams – now and in the future?

A wealth management advisor will look at your answers to those and many other questions, consider your financial assets across all your accounts, and then build a plan to help you achieve those goals and dreams.

How that plan looks will depend on the wealth manager you choose to work with.

But here’s where wealth managers start to differ from each other. Too many stop here once the plan is created and put into motion. And in doing so, they have denied a fundamental truism of life:

Not everything will go according to plan.

Life is messy. Some messiness happens within families, like costly medical problems, divorce, and business failures. Some messiness happens outside, like pandemics, natural disasters, and recessions. But messiness will enter your life, one way or another.

The kind of wealth management plan you should expect from the best wealth managers will incorporate the certainty of negative life events and positive ones, along with your desired lifestyle outcomes.

Again, this is why the single best resource we can recommend to you is our free guide, The Ultimate Guide to Choosing the Best Financial Advisor, For Investors With $5 Million To $500 Million in Liquid Assets.

Talk to an Elite, Private Wealth Management Firm Now

Schedule a Call with CEO and Co-Founder Hutch Ashoo

Wealth Management Example

A wealth management advisor or firm provides financial advisory services to affluent individuals and families. They may advise organizations as well.

Wealth managers working for an investment firm will have extensive knowledge of strategies for asset management and diversification and tax minimization.

Wealth management includes managing investment assets for clients with a high net worth or simply making recommendations for those who trade on their own.

Wealth Management Business Structures

Wealth managers may be self-employed or own a small financial advisory business. They may be employed at a bank or investment company, and these organizations may be large multinational firms.

Wealth management advisors work closely with their clients to develop financial plans and investment strategies. They focus on the needs and wants of their clients to establish a tailored course of action to grow and protect their wealth.

Wealth Manager Fees

A wealth manager fee is likely to be a percentage of the value of the assets the advisor manages for the client, averaging around 1%. The wealthiest clients will pay lower fees.

Robo-advisors that provide wealth management advice charge much lower fees. Their services are not as personalized as those provided by a dedicated advisor.

Some advisors, called fee-based advisors, earn commissions on the products they sell, in addition to fees paid by customers. Fee-only advisors are compensated only by the fees their customers pay, which greatly reduces conflicts of interest.

Wealth Manager Credentials

Wealth managers have credentials such as certified financial planner (CFP), certified public accountant (CPA), or chartered financial analyst (CFA). There are many more, of which over 200 are listed in detail on the FINRA website. The advisor’s designation reflects their capabilities and training, including continuing education.

Wealth Management Strategies

The wealth manager establishes a relationship with the client to create a financial plan that acts as a framework for achieving the client’s financial goals.

The manager and the client work together to clarify goals and outline strategies to meet those goals, utilizing the details of the client’s financial situation. These strategies may focus on investment management, retirement planning, estate planning, or philanthropy.

Is a Wealth Manager the Same as a Financial Planner?

Wealth managers tend to focus on assets and investments, while planners work with clients on all aspects of their financial needs, including budgeting and insurance.

What is the Difference Between a Wealth Manager and Financial Advisor?

All wealth managers are financial advisors, but not all financial advisors are wealth managers. As stated earlier, wealth managers only work with high net worth or ultra-high net worth clients.

Some set minimums at $1 million, some at $20 million, and everywhere in between. Again, Pillar requires a $5 million minimum in investable assets.

An IT manager will work on several aspects such as audience insight, content measurement, product development, and they process data from the traffic report. This is similar to a wealth manager where they have to manage several aspects for their clients like retirement planning, estate planning, risk management, and other financial matters.

Wealth managers generally offer greater customization, more personalized boutique service, and fewer clients so they can invest more time in the relationship.

This is why Pillar Wealth Management only takes on a certain number of new clients each year.

Wealth managers also frequently offer many additional services that affluent households need. These can include:

• Tax accounting and strategic planning

• Retirement planning

• Legal planning

• Estate planning

• Risk management

• Trust services

• Banking services

• Philanthropic planning

Most wealth managers will farm the detailed work in these areas to experts in these fields they trust in their networks. So they can help you find the team of elite advisors you need to secure your retirement and protect your wealth.

But most wealth managers also possess enough expertise in these areas to develop plans and strategies, make detailed and quality recommendations, and advise you as you make your decisions.

Some charge extra for these services. Some do not.

Pillar includes all of these additional services as part of our simple percentage fee. We do this because these extra services aren’t optional for high net worth households. These are essential services.

You will have to make decisions in most or all of these areas at some point in your life, so we don’t believe you should have to pay extra for them.

What Is the Difference Between Wealth Management and Investment Banking?

Some of our high net worth friends have confused these two terms as well, so it’s worth a quick clarification.

An investment banker offers financial services to businesses and corporations, not individuals. Because many high net worth and ultra-high net worth investors also own businesses, there is some overlap here.

That’s why Pillar and many of the best wealth management firms include services like M&A, business exit planning, and stock splits in our single-fee wealth management package. 

But investment banking companies won’t get into services like retirement planning, tax planning, or estate planning and won’t generally offer anything to individuals.

Advantages of Private Wealth Management Firms

One of the most important things to understand about wealth management is that private firms will, almost universally, deliver better service than big banks and brokerage firms. It’s not hard to understand why, but it boils down to this:

Large firms are system-driven, and private firms are relationship-driven.

Large firms use the same formulas, blueprints, and options for most clients. They ask the same questions, use the same forms, and input your data into the same software as the young person with $15,000 to invest.

They do this because it’s efficient, easier to train for new staff, and easier to manage. All this makes sense, and there’s nothing wrong with it.

But it’s not customized. They might use the word, but they have no idea how far short they’re falling of its true meaning. And high net worth families need customization, especially as you get closer to retirement.

Private wealth management companies begin with the relationship, so you can ask the questions you care about most and talk about integrating those into a truly customized plan. Questions such as:

• Can I really retire at age 50?

• How much should I set aside for unplanned future major expenses?

• Will my passive income and investment growth be enough to sustain my lifestyle?

• Should I sell one of my properties?

• Should I sell my business?

Large publicly traded firms have no process for definitively answering questions like this.

Here are some other advantages of private banking and wealth management firms.

Private Firms Keep Your Taxes Lower

Tax laws frequently change, especially the smaller, less headline-driven rules. And important dates and deadlines sneak up on you, requiring you to take certain actions to avoid penalties or make decisions that will affect your retirement income and withdrawals.

Large firms are much more likely to overlook these details, which are different for everyone.

Morgan Stanley has over 15,000 ‘wealth managers,’ though they are really just financial advisors. It is doubtful that all of these workers stay on top of ever-changing tax laws and strategies that shift as you age.

In reality, only a fraction of them do. Most are fresh out of college, gaining experience, learning the field so that they can strike out on their own and open a private wealth management company one day.

Don’t be their guinea pig while they work for the big firms. 10 more ways private wealth management companies can best serve ultra-high net worth investors anywhere. 

Private Firms Offer More Experience and Stability

Many large firms hire graduates right out of college and then call them wealth managers.

What does a 25-year old know about how it feels to have $30 million as you approach retirement? Large firms have so many advisors and managers that it dilutes the talent.

There are a handful of wealth management experts working at the large firms, in all likelihood. But the chances of you getting to work with them are low.

They probably have full caseloads, and your portfolio will get passed off, re-assigned, and shifted around every couple of years as their personnel situation changes.

You will not get to work with the same wealth manager for decades like you want to.

Here are more reasons large firms don’t offer elite-level wealth management. 

How to Find the Best Wealth Management Solutions Near Me

What matters more than anything when choosing a wealth manager is their process for adjusting your financial plan on an ongoing basis. Your life situation changes as the world changes around you.

How do they integrate your goals and dreams into your financial plan, and how do they keep that plan tuned to those goals, year after year?

These are THE questions you need to answer when looking for a wealth manager.

You want your investments to grow. But more than that, you want to have security and stability.

As you plan and prepare for retirement and then live it out, you want to know that your money will not run out and that you’ll achieve all the financial and lifestyle goals you set out to achieve.

That matters far more than where your wealth manager is located.

There are four steps in identifying your best match with a wealth manager. See more about these 4 steps here. 

First, evaluate yourself – know what you want. Until you know what you want, every wealth manager will seem like a pretty good option. You won’t be able to recognize the differences well enough.

Second, learn how to spot the elite wealth management firms. This is about much more than promising good performance, which everyone does. Do they have a clear and well-developed process – with data – for how they achieve that performance?

Here are five qualities that define elite wealth managers:

1) They measure your plan’s progress with ongoing quarterly stress tests

2) They believe in strategic passive money management, not market timing

3) They keep your costs as low as possible

4) They use performance as only one measure of progress

5) They are a fiduciary and independent advisor, free from conflicts of interest

Third, you must acknowledge the unknown future. We touched on this before, but it must be said repeatedly. Your wealth manager must acknowledge and anticipate the unknown and the unexpected, but so must you!

Otherwise, your wealth manager will feel like a nag, always reminding you of what could happen and why they’re doing your planning the way they’re doing it.

You must agree with the reality of financial planning. If you can’t, then you’re not a good match for each other. Remember the dark staircase.

Finally, empower yourself with knowledge about financial advisors and wealth management.

Again, we strongly encourage you to get our authoritative guide, The Ultimate Guide to Choosing the Best Financial Advisor, For Investors With $5 Million To $500 Million in Liquid Assets.

That guide expresses clearly and thoroughly all the most important issues to consider when choosing the best advisor or wealth manager. We truly wish every person in the country would read it. Because we believe it is your right to get the best financial services to secure your wealth in the future.

And, to learn more about Pillar’s approach to investment performance, you can also get our other eBook, Improving Portfolio Performance, The Shifts Multi-Millionaires Must Make to Achieve Financial Security and Serenity.

As a final resource, if you’ve reached the point where you want to start talking to prospective private wealth management companies, here are 10 questions to ask them before working with them.

Talk to an Elite, Private Wealth Management Firm Now

Schedule a Call with CEO and Co-Founder Hutch Ashoo

Conclusion

A high net worth individual usually does not have sufficient time to manage their own wealth. That is why they need to find a firm with wealth management teams that can help them to maintain their financial health, using the top financial services.

However, some people may consider that the best financial firms or largest wealth management firms are only based on the Assets Under Management (AUM). You cannot merely judge a good firm and wealth management based on the AUM only. Yet, some people get it wrong. You should not choose a firm by only determining the number of assets they are managed.

If you are looking for financial firms in San Francisco, New York, Los Angeles, or other cities in the United States, that is not a hard task. With the vast development of the internet, you can just check several firms in Investopedia such as Merrill Lynch Wealth Management, Credit Suisse, Global Wealth Investment Management, Bank of America Private Bank, J.P Morgan Private Bank, Morgan Stanley Wealth Management, BNP Paribas Wealth Management, UBS, Goldman Sachs, Deutsche Bank, Citi Private Bank, HSBC Private Bank, Wells Fargo, Global Wealth Management, which are spread across the U.S.

It is easy to find private banking or private wealth management that provides financial services. However, those big companies and wealth management firms cannot guarantee that you will get the best service as they manage too many clients. Pillar Wealth Management can be your choice as Pillar WM manages only a few clients. This means the client receives personalized planning based on their choices. With highly experienced teams, Pillar WM will give you the best result, which you never expected.

Related Posts

CERTIFIED FINANCIAL PLANNER

INVESTMENT MANAGEMENT

INVESTMENT COMPANIES

FINANCIAL ADVISOR