Gold coins stacked on financial paperwork with text "What is Wealth Management?"

What Is Wealth Management, and Do You Need It?

Brad Chastain Director of Education U.S. Money Reserve

Written by Brad Chastain

Jun 30, 2023

You’ve worked hard to build your net worth. Wealth management helps you get the most out of your efforts.

What is wealth management? While wealth protection is meant to safeguard assets, wealth management is defined as the process of reviewing and making decisions about your wealth so you can achieve your financial goals, as noted by Forbes.

Understanding Wealth Management

For some, wealth management refers to advanced financial advisory services that have primarily been used by affluent individuals to preserve their wealth through asset acquisition and allocation, estate planning, and tax planning.

While professional wealth management is often utilized by those with high net worth and/or financial situations that make managing wealth complex, anyone who wants to get the most out of their asset mix, including those who wish to pass on generational wealth to their children and grandchildren, may benefit from wealth management strategies.

Why Wealth Management Matters

Having better control over your assets is beneficial regardless of your net worth. For people with large amounts of cash and other assets, wealth management may be crucial. Without it, an individual or family could see their wealth erode in the event of a market shift or major life event that may lead to a financial hardship. Keeping track of all the assets in a diversified portfolio may also prove difficult, resulting in a loss of wealth.

Wealth Management Strategies

Wealth management strategies are financial tools for creating, growing, and safeguarding wealth. While many wealth management strategies exist, not every strategy will necessarily be appropriate for your unique circumstances and financial needs.

Finding the best combination of wealth management strategies for your particular financial situation may take time, which is why some consumers prefer working with a wealth manager or financial advisor. One of the services wealth managers can provide is analyzing your finances to determine which wealth management strategies may provide you with the best outcomes. These strategies then become part of an overall financial plan aimed at protecting, managing, and growing your wealth.

Common wealth management strategies include:

  • Financial planning
  • Portfolio diversification
  • Asset allocation
  • Individual Retirement Account (IRA) management
  • Estate planning
  • Tax planning
  • Establishing trusts
  • Leveraging different types of insurance
  • Philanthropic donations/charitable giving
  • Cash flow management
  • Debt management
  • Real estate management

To learn more about wealth management strategies, explore our blogs on portfolio diversification and wealth protection. Read on to learn more about professional wealth management.

What Does a Wealth Manager Do?

A professional wealth manager, sometimes called a wealth management advisor, is a financial expert who provides guidance across a broad range of financial topics with the goal of maintaining and growing a client’s wealth. They act as a consultant, getting to know their client’s financial situation in depth to provide the best strategy for safeguarding assets.

Financial professionals must have the correct expertise to call themselves wealth managers. Certifications often require five or more years of experience working in finance with an emphasis on financial analysis and planning. Wealth managers employ a wide variety of wealth management strategies, often working with families and individuals who have substantial net worth spread across many assets.

Wealth managers often take a holistic approach that incorporates numerous financial tools and strategies that work together. They may bring in specialists with even greater expertise to implement parts of the financial plan they create. For example, an estate planning attorney may be used as an advisor or to create legal documents for establishing a trust.

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

The roles sound very similar, but there are differences between a wealth manager and a financial advisor. While the designation of wealth manager often refers to a more specialized role, the term “financial advisor” is much more general. A wealth manager is always a financial advisor, but not every financial advisor qualifies as a wealth manager.

A financial advisor is anyone who provides professional guidance and services related to budgeting, saving, asset allocation, estate planning, and money management decisions. They may also help clients create financial plans based on current needs and long-term goals. Essentially, a financial advisor can provide expertise related to personal finances but does not specialize in wealth management strategies.

Wealth managers may provide a broader scope of services, have experience in wealth management, and have a higher minimum capital requirement compared to financial advisors.

How Much Money Do You Need to Take Advantage of Wealth Management?

The minimum net worth or assets that a person must have for professional wealth management services varies. Wealth managers and wealth management firms typically help clients with assets in the range of $250,000 to 5,000,000 in account minimums.

While only a small percentage of people fit that category, anyone may benefit from using wealth management strategies to help improve financial security for themselves and their descendants.

How to Choose a Wealth Manager

Your wealth manager can have a huge impact on financial security, not just for yourself but also for your children and grandchildren. You may also end up working with this professional for years, so it’s vital to find a wealth manager you can trust. Getting recommendations from friends, family, or colleagues may be a good place to start, but if that’s not an option, consider taking these three steps to choose a wealth manager.

Analyze your assets, needs, and goals.

Before hiring any type of financial advisor, you might consider looking hard at your assets and current financial situation. You may also want to think about your financial needs both now and in the future. Together, your assets, needs, and goals can help direct you toward wealth managers who understand where you are now, where you want to be, and how you might be able to get there.

Consider credentials.

No two wealth managers work exactly alike or will provide the same advice. But they all should have certain certifications and credentials that qualify them to provide wealth management services.

Credentials to look for include:

  • Bachelor’s or master’s degree in economics, finance, or business
  • Certified Financial Planner (CPA)
  • Certified Private Wealth Advisor (CPWA)
  • Chartered Financial Consultant (ChFC)
  • Chartered Financial Analyst (CFA)
  • Certified Investment Management Analyst (CIMA)
  • Certified Estate Planner (CEP)

The qualifications for these certifications can provide you with an idea of the years of experience and knowledge level achieved by a particular wealth manager. New or recent certifications may be a sign that a wealth manager is committed to expanding their skill set.

Ask for referrals from current clients.

Another way to gauge a wealth manager’s knowledge and skill level is to talk with current clients. Asking if wealth managers have referrals from current clients is beneficial in a few key ways:

  • Any wealth manager who can’t provide or refuses to provide referrals may not be able or willing to offer the level of transparency you want from a wealth manager.
  • You’ll get a better idea of what it’s like to work with that wealth manager.
  • A referral may inform you of how familiar that wealth manager is with your type of assets.
  • It may help you gauge how successful that wealth manager might be at managing your wealth.

If the wealth manager effectively handles portfolios that are similar to yours, that can be a positive sign. What current clients have to say, both good and bad, may also be carefully considered, because they may be the best people to help you determine if a wealth manager is the right fit.

Alternatives to Professional Wealth Management

The most recent data from the latest Survey of Consumer Finances found that the median savings account balance for Americans is $5,300 (not including retirement accounts or other assets). In terms of wealth, the average American is doing much better, with a median of $121,700 in total assets.

A societal focus on liquid assets—those in in savings and checking accounts—may be why many people think wealth management isn’t necessary; it’s easy to forget that other asset types also add to your overall net worth and may require help to manage.

If you own assets that fall below the threshold for working with a wealth management firm, you still have wealth management strategies you may want to consider utilizing.

Be your own wealth manager.

Can you answer the question “What does a wealth advisory professional do?” If so, you may be able to oversee wealth management on your own. Analyzing assets, financial needs, and goals can make up a large percentage of the wealth management process. Then, using that information, a wealth manager decides which financial tools to use. You may not have all of the credentials, but no one knows your financial situation better than you. It is possible to be your own wealth manager and make decisions regarding your assets and asset mix.

Talk with a financial advisor.

Once you’ve analyzed your unique financial situation and goals and established an idea of what’s needed for the management your wealth, if you’re still unsure what steps to take next, you may want to speak with a financial advisor. Financial advisors aren’t wealth managers, but they are familiar with a variety of financial strategies and can help you create a financial plan to follow going forward.

Leverage alternative assets like physical precious metals and/or a precious metals IRA.

One wealth management strategy you can follow on your own with or without the help of a financial advisor is to add additional protection and growth potential to your portfolio in the form of physical precious metals, including gold, silver, platinum, and palladium. Precious metals can be held privately or included in a retirement portfolio as a precious metals IRA. This is a special type of IRA that allows you to include gold, silver, and other precious metals that can’t typically be included in conventional IRAs. Self-directed precious metals IRAs come with other benefits like hedging against inflation and providing a potential safety net in the event of a market downturn that may impact your other assets.

Request a free Precious Metals IRA Information Kit to learn more about how alternative wealth protection strategies may help you manage your wealth more effectively.


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