What is a wealth management advisor and what do they do?

Table of Contents
What Does a Wealth Management Advisor Do? How Do Wealth Management Advisors Get Paid? What Do You Look for in a Wealth Manager? Final Words

If you are a HNWI or UHNWI, there is a good chance that you’ve had some experience dealing with wealth management advisors or at least those who claim to be one. Yes, we are talking about the huge financial institutions—big banks, well-known Wall Street brokers, etc.—that have McDonaldized their wealth management process for HNWIs.

Unlike mega banks and brokers, Pillar Wealth Management provides far-reaching wealth advisory services that are tailored to your situation and needs. Our wealth managers have more than 60 years of combined experience in wealth management to ensure that you achieve serenity regarding your financial situation. If you are someone with a net worth between $5 million and $500 million in liquid assets, we can help you protect and grow your wealth. Schedule a free chat with us today by visiting our website.

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What is a Wealth Management Advisor?

A wealth management advisor is a professional who works with HNWIs and families, offering personal advice on all aspects of financial planning. They understand a client’s personal and financial circumstances due to an open and trusting relationship. A private wealth management advisor works with a client to build a financial plan that allows the client to meet both long- and short-term financial goals. The plan involves advice and counsel on investment, retirement, gifting, insurance, and tax and estate planning.

What Do Wealth Management Advisors Do?

Wealth management advisors offer a full scope of financial services geared toward meeting the needs of HNWIs. Major activities include developing an all-inclusive financial plan based on the goals set by the client, for the long and short term. This may include strategies developed for investment management, retirement planning, philanthropy, insurance, tax, and estate planning. Open and trusting relationships with clients enable wealth managers to gain a deep understanding of their personal and financial circumstances. As a result, the advice offered is relevant and effective.

The work of wealth management advisors involves managing and monitoring asset portfolios. They monitor investment performance and make necessary changes to align portfolios with the client’s objectives and risk tolerance. This proactive approach makes it possible to navigate market fluctuations and take advantage of investment opportunities to optimize returns and secure assets. Regarding the coordination of activities with other professionals, such as tax advisors and estate planners, a wealth manager pursues an integrated approach to wealth management.

This approach ensures that the interests of the client in all aspects of their financial life are considered and pursued in an integrated fashion. Using knowledge and a network of relationships, a wealth management advisor seeks to provide security and peace of mind for their clients as they devote their time and energy to their personal and professional aspirations.

Wealth Manager vs Financial Advisor

A wealth manager provides financial services to individuals with at least $1 million in investable assets. Some of these services may include financial and retirement planning and investment management. Even though most financial advisors offer the same range of goods and services, some of them may specialize in a given area, for instance, in retirement or estate planning. Often, an advisor may require a minimum amount to start an investing account for a client and then charge a percentage of the account’s value as a fee.

What Are the Qualifications of a Wealth Advisor?

Before you decide to hire a wealth advisor, you need to understand their qualifications to ascertain if they have the capacity to manage your wealth. Most qualified and reputable wealth advisors have the accreditation of Certified Financial Planner, Chartered Financial Analyst, or Chartered Wealth Manager. These qualifications are awarded upon successful completion of comprehensive training and exams, along with maintaining continuous professional development in financial planning, investment management, and related practices.

Experience is a critical qualification for a wealth advisor. Look for a history of working with high net worth individuals and families, offering retirement, tax, estate planning, and investment management services. An advisor with a history of successfully managing complicated financial situations will be able to give you more personalized and practical advice.

The advisor should be registered with regulatory authorities like the Financial Industry Regulatory Authority or the Securities and Exchange Commission. This registration ensures strict fiduciary standards are adhered to, with your best interest as a priority in the advisory role.

These qualifications can help you gauge the advisor’s integrity and reliability. You should also check their history of compliance and disciplinary actions.

How to Find a Wealth Advisor

Finding a wealth advisor can be challenging. and for that reason, a methodical approach can be beneficial. Start by checking listings for wealth management firms and individual advisors in your vicinity. This will give you a general idea of the options available and help you build a list of potential advisors. Look for companies that have a solid reputation, have been in business for a number of years, and exude stability and reliability.

It can be useful to find a referral source you trust. Turn to your friends, family members, or coworkers, with the same financial profile, and see if they can provide a referral for a wealth advisor, providing information on their performance, communication style, and overall effectiveness. Other professionals that you work with, such as your accountant or attorney, also make a good referral source; they often work with other finance professionals.

Interview your prospects thoroughly. Ask them about their background, qualifications, and client histories. Check their credentials with regulatory bodies, such as FINRA or the SEC, and make sure there aren’t any red flags. You’ll want to know what their investment approach is and how they are paid. Make sure they’re transparent about their fees and, as a fiduciary, they put your best interest first. Take your time and interview at least three advisors so you can compare services, fees, and philosophies in order to choose the one that best fits your financial situation and goals.

Check local listings

Perhaps the most critical first step in getting a wealth management advisor is to use a local listing. Local business directories, online sites, and professional organizations often list financial advisors in your area. This will usually give such basic information as the advisor’s credentials, their area of specialization, and contact information so you can compile a brief list of potential advisors who suit your needs. Often, such listings include reviews and ratings by other customers, which helps ascertain the reputation and track record of the advisor.

You want to validate the credentials of each of the advisors by referencing the regulating bodies of FINRA or the SEC to ensure that they are properly licensed and in good standing. Spend some time on the advisor’s website reading through client testimonials and case studies, where available, to understand their experience and whether what they offer is a good fit for your financial needs.

Good research of a local listing will be able to narrow your choices to a wealth management advisor best able to help you manage and grow your assets.

Scope out the scene

As with anything, make sure to canvass the best fit to suit your needs when looking for a potential wealth management advisor. To start with, browse wealth managers who are available in your area and online, in directories, and those working with high net worth and ultra high net worth clients. Most of these listings have valuable information on qualifications, areas of specialty, and client reviews. A wealth advisor should be registered with a reputable body, for example, FINRA or the SEC, to assure clients of their credibility and observance of ethical principles.

It is also vital to schedule initial meetings with two or more advisors to discuss the services they offer, fee arrangements, and investment philosophy. During an interview, inquire about the type of clients they normally deal with, their experience, and how they practice their trade. This can ensure that the advisor’s qualifications and practice style are in line with your financial goals and values. It takes a lot of time and effort to meet and interview potential advisors, but the more due diligence you do up front, the better chance you’ll have of identifying a wealth manager who can effectively protect and grow your assets.

Fee-Only Wealth Advisors May Offer More Well-Rounded Advice

Fee-only wealth advisors will often give advice that is more well-rounded in scope due to the fact that their payment structure is directly aligned with the best interest of the client. Unlike commission-based advisors, who are motivated to pitch high-commission products, fee-only advisors charge a flat fee or a percentage of the value of the assets under management. This payment structure supports a fiduciary relationship where the advisor’s focus is on the financial well-being of the client and their long-term objectives, not on how much commission can be generated from the sale of selected financial products.

Fee-only wealth advisors are also more likely to offer comprehensive financial planning services that encompass a wide range of financial needs beyond mere investment management. This holistic approach deals with the preparation of a financial strategy, including retirement planning, tax strategy, estate planning, and risk management. Fee-only advisors can offer objective advice, which is more likely to support the client’s unique financial situation and aspirations, leading to more effective wealth management and financial security, free from conflicts of interest related to the commission-based model.

Search for the Proper Credentials

A financial professional should have the right qualifications and credentials to be your wealth manager. Look for a Certified Financial Planner, Chartered Financial Analyst, or other similar designation, that testifies to professional competence and high ethical standards. These professional designations require passing exams, a level of continuing education, and a code of ethics—all of which imply the advisor is equipped to handle complex financial situations. Checking for these credentials can eliminate advisors who lack the right qualifications or are not committed to a fiduciary responsibility.

No less important is ensuring the regulatory registration of an advisor with FINRA and the SEC. These regulators maintain databases against which to check the background of an advisor, inclusive of disciplinary actions or complaints. In conducting research on the credentials and standing of an advisor with regulators, you can feel confident that the advisor could, in fact, manage your wealth competently and in your best interest. Due diligence in this area ensures you are securing your financial future with a qualified and trustworthy professional.

How Wealth Managers Are Different

As a smart investor, you need to know the difference between what wealth management advisors do and what services other advisors offer; for instance, a common example is robo advisors.

Robo advisors are computerized algorithms that manage your investments with little or no human interaction. The investment services use a generic formula, applied to every investor. Doesn’t sound very reliable, right?

You deserve individualized attention if you are a high net worth or ultra-high net worth investor. There is no way a robot can understand you and your life goals like a human wealth manager.

You can go to a financial advisor, who can create a plan for your investments, retirement, and current finances, as well as your taxes. Even though financial advisors should be able to do all that, most financial advisors at large banks or Wall Street organizations end up giving you an investment plan without executing it and even that is just a copy/paste of what they give others!

Wealth managers are typically Registered Investment Advisors, who offer a complete range of financial advisory and investment services. At Pillar Wealth Management, we help to grow, maintain, and manage your wealth based on your specific goals. If you want a full portfolio manager, a wealth manager will do that too.

Fiduciary Duty

Here is where you find a huge divergence between RIA wealth managers and other forms of investment services. Big Wall Street investment brokers and central banks simply either purchase these securities on your behalf or offer you one of their “tried and tested” investment plans.

RIA wealth managers act on your behalf in the best way possible under a fiduciary responsibility because they have to be registered as an RIA with the Securities and Exchange Commission and have to be in compliance with the Advisors Act of 1940.

The Advisers Act of 1940 makes them liable to, at all times, act in your best interest when giving advice on investments or managing your investment portfolio. They are required to make a full disclosure regarding any material conflict of interest. If you want to know what it’s like working with a real RIA wealth advisor who really cares about protecting and growing your wealth, go to our website and set up a free chat.

Services Offered by Wealth Management Advisors

Wealth management advisors focus on helping you achieve financial security and financial serenity, allowing you to live your life the way you prefer. You have worked hard to be able to enjoy yourself; you want your life goals to come about with the help of a wealth manager, free of worrying about losing your liquid assets.

If you are an ultra high net worth individual with $25 million to $500 million in liquid assets, our hardcover book, “The Art of Protecting Ultra High Net Worth Portfolios and Estates – Strategies for Families Worth $25 Million To $500 Million,” can help you understand how to best protect your wealth. We can help you, based on over 60 combined years of experience as wealth advisors at Pillar Wealth Management. Services encompass the following:

• Investment management
• Retirement planning
• Asset allocation analysis
• Tax planning
• Estate planning
• Insurance planning

Which is not a full list of our offerings. The point is our wealth management services will revolve around the personal life goals you have, rather than working to earn commissions on investments.

Investment management

At the heart of wealth management lies investment management, which is about strategic coordination and management of assets, whether for an individual or a family. A byproduct of this activity would be a tailor-made investment strategy meeting the objectives, risk appetites, and time horizons of high net worth individuals. Drawing from analyses of market conditions, economic trends, and personal circumstances, a wealth management advisor provides investment advice for a wide range of asset classes, including stocks and bonds and real estate and other alternative investments. Every investment is one element of a broader strategy to facilitate the client attaining their desired financial outcomes.

Active management of investments means constantly reviewing an investment portfolio’s asset allocation relative to market dynamics and the changing circumstances or needs of the client. Wealth management advisors offer advice for making informed decisions on when to buy, hold, or sell assets. They ensure the portfolio remains on course toward attaining the client’s goals. This proactive strategy captures market opportunities and protects the portfolio from potential downturns. Regular review and rebalancing of the portfolio ensures that the desired asset allocation remains in place, hence optimizing returns while risk is efficiently managed.

A wealth management advisor provides full-spectrum financial advice beyond just portfolio management, ranging from insights on investing in a tax-efficient manner to estate planning and retirement strategies, integrated into an overall investment plan. Looking at all aspects of a client’s financial life can offer the basis for an integrated strategy of wealth preservation and growth. These insights into the financial markets and the needs of high net worth individuals are used by wealth management advisors to help their clients achieve financial security and peace of mind.

Retirement planning

Retirement planning is a key area where wealth management enables the high net worth individual to continue their desired lifestyle with financial independence at the end of their work life. The wealth advisor prepares a comprehensive plan that aligns your long-term objectives with your actual financial portfolio. This includes identifying your present assets and liabilities and estimating your future expenses and income from various sources, including investments, pensions, and social security. The wealth manager will take these factors into consideration to determine how much you should save and invest.

One of the main benefits of working with a wealth management advisor is that they approach each client individually—going far beyond most generic retirement calculators. A wealth advisor will consider your individual circumstances: how much investment risk you are willing to take, your lifestyle aspirations, and potentially how much your healthcare could cost. Being able to advise and guide you in your understanding of very complex financial products and strategies, from tax-advantaged retirement accounts and annuities to specially designed investment portfolios, means providing custom guidance. Custom guidance means that your retirement plan is not just robust, but it is flexible enough to cope with changing market conditions and life events.

Your wealth management advisor will give you the support needed to monitor your plan. They update you on your progress and make necessary adjustments to keep you on course toward your retirement goals. This proactive approach keeps you abreast with your progress and allows you to make decisions regarding your financial future. You can draw comfort from the fact that your advisor is dedicated to making the right choices leading to a comfortable and rich retirement.

Tax planning

Tax planning as an element of wealth management is highly relevant to high net worth individuals. Tax planning is the process of establishing a financial position where all the components of a financial plan work together to have the least possible amount of tax paid as prescribed by law. Such strategies include tax loss harvesting, use of tax-advantaged accounts, and maximizing deductions and credits. Strategic tax planning may result in significant cuts to tax liability, hence more wealth retained for better financial well-being.

A wealth management advisor offers personalized tax strategies that take into consideration your goals and circumstances. A good example is advice on timing for income, purchases, and other expenditures to lower the tax burden. The advisor can help the client in dealing with complicated tax regulations so as to stay on the right side of the law with better tax results. Such an individualized approach helps cut taxes while integrating tax planning into estate and retirement planning to create a tax-effective financial plan.

Proactive tax planning can cushion the effect of unforeseen tax changes and market fluctuations. Wealth management advisors monitor tax law and policies to be sure your tax strategy is up-to-date and efficient. They can advise on charitable giving to provide the maximum tax benefits, while also supporting causes you believe in. Working with a wealth management advisor can ensure comprehensive, forward-looking tax planning that is integrated with your broader financial objectives.

Estate planning

This essential aspect of wealth management deals with preparing the transfer of the assets an individual has at the time of death. It ensures that your wealth is distributed in an organized and predictable manner, hence reducing possible liabilities for your estate and minimizing the risk of disputes among your family members over your belongings. An ideal estate plan will generally involve a will, trusts, power of attorney, healthcare directives, and beneficiary designations. A good estate plan will enable a person to provide for the needs of family members, support charitable causes, and establish control over the legacy.

Estate planning is complicated for ultra high net worth individuals due to the huge value and range of their possessions. In fact, this will require a wealth management advisor to develop strategies to protect this wealth from litigation or excessive taxation. For example, trusts can manage and distribute assets very well and come with numerous benefits, such as the privacy of the involved parties, asset protection, and potential tax savings. A proper estate plan is one that is also able to deal with a business succession so as to manage transfer of leadership and ownership in family-owned enterprises.

A good wealth advisor can make all the difference in the success of your estate plan. Tax law, protection of assets, and planning for succession are but a few of the concerns they address. They can also ensure that your estate plan remains updated to reflect changes in your financial circumstances, in family situations, and in the legal environment. When you align with a knowledgeable advisor, your estate will be managed and distributed according to your wishes, providing lasting benefits for your heirs and charitable interests.

Insurance planning

Insurance planning is an important component of wealth management, especially for high and ultra high net worth individuals. It involves evaluating various types of insurance and the level of coverage considered necessary to protect your assets and cushion against potential risks. Strategic insurance planning can protect wealth from natural disasters, liability claims, and health issues. A wealth management advisor can help you select the proper type of insurance products and structures to ensure your protection is comprehensive and fits in with your overall financial plan.

For high net worth individuals, there may be a need for more coverage than that provided by a standard policy. Most wealth management practitioners will, more often than not, advise that insurance be bespoke and tailored to specifically address the risks and needs of their high net worth clients. Thus, insurance protection is likely to have not only higher limits but also specialized policies for valuable assets, such as art collections or luxury properties, as well as advanced life insurance strategies meant to facilitate estate planning and wealth transfer. A wealth management advisor recommends insurance that is specifically built for your situation so your assets are protected and your family’s financial future is secure. 

Insurance planning should be a continuous process, not a one-time affair. Your insurance requirements change with changes in wealth level and financial conditions. This makes it mandatory that insurance planning be a continuous and dynamic process reviewable and updated from time to time to maintain the same level of protection. Wealth management advisors will always be in close contact with their client base to keep track of their insurance coverage and make requisite modifications on grounds of life changes such as marriage, the birth of a child, or the acquisition of significant new assets. This proactive approach towards insurance planning ensures high net worth individuals are well prepared against any eventuality that could affect their financial security.

How Are Wealth Management Advisors Paid?

Investors have the right to know how wealth advisors are paid and the fees and costs to look out for.

Straightforward, reputable wealth management firms like Pillar Wealth Management provide a concrete outline of each cost and fee that you are likely to face from the very first meeting. You will never be left wondering where your money is going, nor will you face any hidden costs.

Different passive and active wealth management styles come at a difference in cost. Active wealth management often costs more because it is continually buying and selling investments. This habit invariably leads to far more transaction costs and service fees.

With passive wealth managers, you’ll find that they will usually charge a percentage of your total assets being managed, each and every year. The market average for this fee is 1%. An individual with over $10 million in liquid investments can negotiate for lower fees. Click here to find out more from our guide.

Let’s look at the major red flags you need to look for with wealth management fees and costs. Small costs can pile up to hundreds of thousands of dollars for high net worth investors!

Red Flag: The Advisor Says Costs and Fees are the Same

Notice how we’ve consistently referred to costs and fees as different charges. Almost every advisor will charge a fee for their services, as we mentioned earlier. However, a wealth manager who has your best interests at heart is also responsible for informing you of the costs you incur and how to manage them.

Some of the most common costs associated with wealth management include taxes, commissions paid to money managers, bond sale spreads, internal expenses, and others. However, smart wealth management can reduce most of these costs.

At Pillar Wealth Management, we save on avoidable costs. By saving on these costs, we’re able to maximize your portfolio growth strategies and your investment performance. To learn more about how we optimize your portfolio, check out our easy-to-follow guide for families worth $5 million to $500 million.

Your wealth manager needs to inform you about all hidden and avoidable costs, such as taxes from capital gains, active vs. passive costs, bond sale spreads, commissions, and so on. Suppose they don’t—make a run for it!

Do I Need a Wealth Management Advisor?

Maybe. if you have a lot of money to invest, a professional advisor should be involved. You may not want to trade at all or may have other uses for your money. An advisor can draw up a financial plan that includes generating income for retirement, with an investment portfolio that reflects your goals and risk tolerance.

What Do You Look for in a Wealth Manager?

As a high net worth or ultra high net worth individual, you have to be sure you select the right wealth advisor; the wrong one could make you suffer tremendous losses. A wealth manager should:

1. Have a proven record of successfully dealing with individuals of your financial caliber

You’ve worked all your life to be a winner and get to where you are. You’ve made money, and success for you isn’t about beating an index and earning 10% per annum. Your success now revolves around achieving your life goals.

You don’t need someone who’s going to make one aggressive investment after another. You need someone who will help you achieve your goals.

2. Focus on consistent asset allocation

Improving and maximizing portfolio performance is all about having the proper asset allocation and consistency. To learn more about enhancing portfolio performance, check out our guide here.

3. Focus on reducing your costs

This is extremely important. Your wealth advisor should focus on reducing your expenses wherever possible. It can make a world of difference.

4. Invest in your goals

Your wealth management advisor should only work towards reaching your goals without being influenced by their emotions or by conflicts of interest.

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