As a high-net-worth individual looking for help from a financial professional, it’s important to understand the differences between the type of advisors you can hire.
It’s not uncommon to see the terms financial advisor and wealth manager used interchangeably, but the distinctions between the two are often the difference-makers when it comes to reaching your financial goals.
Your finances aren’t something that exist outside of your “real life.” Your assets, and how they are managed, are a means to achieving the life you want.
That’s why you need a partner who understands the life you are trying to build and looks at every financial detail to help you get there.
While financial advisors offer some services that can help you get there, wealth managers who take a comprehensive and holistic approach are often more empowered to operate on a higher level.
Wealth management services are typically of a broader scope, and come with a more personalized approach, as well as an uncompromised fiduciary commitment to protecting your best interests — all of which can make a major difference when trying to maximize the value of your income and assets.
Before we explore each option in-depth and help you decide which financial partner may be best for your unique goals, here’s a quick snapshot of the key differences between the two.
|
Financial Advisor |
Wealth Manager |
|
Provides investment advice and basic planning May focus primarily on managing your investments |
Offers comprehensive financial planning, investment management, tax, estate, and charitable strategies Considers your entire financial life, integrating all aspects to meet your goals |
|
Often reactive, focusing on tasks you bring to them |
Proactive, anticipating needs and creating coordinated strategies |
|
May be product-focused or paid via commissions |
Typically fee-only fiduciaries acting solely in your best interest |
What is a Wealth Manager?
A wealth manager is a type of financial advisor who specializes in serving individuals and families with more complex financial situations. They take a holistic and proactive approach, integrating your entire financial life into one coordinated plan.
With full insight into your personal goals, values, and complete financial picture, wealth managers like our team at Plancorp constantly look for opportunities to help you build wealth and make the most of it.
That might mean suggesting better investment strategies, analyzing different ways to reduce taxes, putting together a strong estate plan, or flagging potential issues and challenges that could affect your financial future before they arise.
At Plancorp, our wealth managers act as fiduciaries – meaning they are legally and ethically bound to act in your best interest, providing financial advice that considers your unique needs.
When partnering with a wealth manager, you can usually expect them to integrate the following pieces of your financial plan:
- Retirement planning
- Tax planning / Tax optimization
- Estate planning / Legacy planning
- Investment portfolio management
- Charitable giving
- Insurance planning
Wealth managers are also able to help in the more complex areas of your financial plan, like managing the tax intricacies of equity compensation or helping business owners with succession planning.
For ultra-high-net-worth families, wealth management firms often offer family office services, which go beyond the comprehensive approach and include additional services like tax filing and coordination, accounting services, and more.
What is a Financial Advisor?
You might assume that financial advisors cover all these bases, but that’s not always the case. Even if an advisor offers financial services beyond investment management, they may coordinate with outside professionals for those areas rather than managing them directly.
This means you may not have a single dedicated advocate overseeing every aspect of your plan to ensure everything works seamlessly together.
Because financial advisors often focus on specific areas, their approach can be more reactive. They may wait for you to bring up potential investment ideas, share news about major life changes, or request additional services before incorporating them into your plan or referring you to another professional.
In many cases, financial advisors concentrate primarily on managing the investable assets you’ve entrusted to them. As a result, they might not spend as much time on assets or financial objectives that fall outside of their direct management.
Financial Advising Credentials
When choosing a financial professional, credentials can tell you a lot about their training, expertise, and focus.
Financial advisors typically hold licenses such as the Series 65 or 66 to provide investment advice, and many earn the CFP® (Certified Financial Planner) designation.
This rigorous certification ensures they have comprehensive knowledge in financial planning, retirement, insurance, tax basics, and ethics.
In addition to Series 65/66 and the CFP® designations, wealth managers often hold additional advanced designations, such as:
- CPA (Certified Public Accountant): Indicates specialized tax expertise, which is especially valuable for integrating tax planning into your wealth strategy.
- CFA® (Chartered Financial Analyst): Denotes a high level of investment management and portfolio analysis expertise.
- AIF® (Accredited Investment Fiduciary): Demonstrated specialized knowledge of fiduciary responsibility and investment best practices, ensuring the advisor is equipped to manage assets in the best interest of clients with a prudent, ethical process
- JD (Juris Doctor): Some wealth managers, including three of Plancorp’s team members, hold a law degree, which can enhance estate and trust planning conversations.
While designations aren’t everything, they provide insight into a professional’s training and the areas where they bring the deepest expertise to your financial life.
Case Study: The Power of Wealth Management
Scenario: Selling Equity Compensation
What does an asset gathering approach look like compared to a wealth manager who acts as your lifetime financial advocate?
Say you are a professional who receives a large equity compensation award one year:
Financial Advisor’s Approach: Helps you sell your vested shares, manage the proceeds, and rebalance your investment portfolio.
Wealth Manager’s Approach:
- Coordinates the sale to minimize tax impact
- Ensures cash flow aligns with your upcoming goals
- Integrates proceeds into your overall investment and estate strategy
- Helps you plan charitable gifts in a tax-efficient manner if desired
With a wealth manager, you keep more of what you earn, ensure it aligns with your overall goals, and gain peace of mind that your strategy is optimized.
When Do I Need a Wealth Manager?
You may benefit from a wealth manager if:
- You have significant assets or equity compensation that adds complexity to your planning
- You’re approaching retirement and want to optimize your income, tax strategy, and estate plan
- You’re a business owner seeking coordination between personal and business finances
- You desire proactive advice and a long-term partnership, rather than one-off recommendations
How Much Does Wealth Management Cost?
Most wealth managers charge a fee based on assets under management, often ranging from 0.5% to 1.5% annually. Some, like Plancorp, have a minimum annual fee to ensure they can provide comprehensive service to each client.
While financial advisors may have lower minimums or charge commission-based fees, wealth management typically costs more due to its depth, breadth, and proactive strategy. It’s an investment in integrated planning that helps protect and grow your wealth efficiently.
>> Read More: How Much Do Wealth Management Services Cost?
How to Choose the Right Professional for You
When deciding between a financial advisor and a wealth manager, consider:
- Complexity: Do your finances involve seven-figure assets, equity compensation, business ownership, or estate planning needs?
- Desired Service Level: Do you want proactive, ongoing guidance or situational investment advice?
- Fee Structure: Are you comfortable with the cost of integrated wealth management if it delivers greater value?
- Fiduciary Status: Is having a professional who acts in your best interest at all times important to you?
Key Takeaways
✅ Financial advisors provide investment advice and basic planning
✅ Wealth managers offer comprehensive, proactive planning across all aspects of your finances
✅ Choosing the right partner depends on the complexity of your needs and your desire for holistic guidance
FAQs
What is the difference between a financial advisor and a wealth manager?
A financial advisor typically only offers investment advice and basic financial planning, while a wealth manager provides integrated planning that includes investments, taxes, estate strategies, and long-term wealth goals.
Is wealth management worth the cost?
If you have complex finances, wealth management often delivers value well beyond its cost by optimizing tax strategies, investment efficiency, and long-term planning.
How do wealth managers get paid?
Most charge a fee based on assets under management. Fee-only wealth managers act as fiduciaries and do not receive commissions from product sales.
When do I need a wealth manager?
When your finances are complex enough to require coordinated planning across investments, taxes, estate strategies, and life goals.
Ready to Take the Next Step?
If you’re wondering whether wealth management is the right fit for you, schedule a private strategy session with our team. We’ll explore your goals and outline how our proactive approach can help you achieve them.
