What is wealth management?

Wealth management is a financial management strategy, typically for people with a high net worth. It may include activities that help manage assets and investments and minimize potential risks or liabilities.

Key takeaways

• Wealth management is a financial service that helps affluent or high-net-worth clients manage their assets.
• Some common wealth management strategies include financial planning, asset management, asset allocation, estate planning and tax accounting.
• The U.S. Securities and Exchange Commission (SEC) recommends researching and verifying a wealth management adviser’s credentials before working with them.

Wealth management is a financial service meant to look after a client’s assets. Depending on the individual’s goals, it could help increase wealth, minimize risk and liability or create a plan for dividing wealth among heirs.

Some common services offered by wealth management firms include:

• Financial planning
• Investment management
• Retirement and estate planning
• Tax planning
• Accounting
• Legal services
• Philanthropy management

Wealth management advisers are the people who offer wealth management services. Also known as wealth managers, they may work individually or through a wealth management firm. They might charge a flat-rate fee or a commission percentage for any assets under their management. 

Wealth advisers create financial plans for their clients that focus on meeting their financial goals. Typically, they’ll begin with consulting services before devising a strategy. And there may be times when they bring in outside partners like tax advisers, accountants or attorneys. 

Wealth management advisers typically handle the wealth of high-net-worth clients. Financial advisers provide services to a broader range of clients who want assistance with managing their money and meeting their financial goals. This may include budgeting, retirement planning or saving for a major financial expense, like college or a house.

Wealth management strategies are typically tailored to each client. They can include:

Financial planning involves a combination of advising and strategizing. For example, advisers might help their clients make investing or saving decisions that could help them increase their wealth over time. 

With asset allocation, advisers decide how to allocate the investor’s funds so that all their investments work together to meet the desired financial goal. Asset management is the oversight and adjustment of those investments.

Estate planning helps clients create a plan for their assets should they die or become incapacitated. This includes determining beneficiaries and creating a will or trust. 

Advisers work closely with tax professionals to help their clients prepare, file and maximize their tax returns. They can advise clients on which deductions to take and precautions to be aware of based on their circumstances.

Wealth managers tend to work with clients who meet a certain financial threshold or plan on inheriting generational wealth. Remember, the definition of a high-net-worth person is generally someone who has at least $1 million in liquid assets, which are assets that can be quickly converted to cash. 

However, there are no specific threshold guidelines for high-net-worth individuals looking for support with wealth management. And each adviser may have their own requirements or preferences for who they work with. 

Wealth management services can be costly. Clients may want to weigh their individual assets and net worth against the potential expense.

The SEC lists some things to think about when working with an investment professional: 

• Client relationship summary: Prospective clients can find information on the types of services they offer, any conflicts of interest they may have, their legal and disciplinary history and their standard of conduct.
• Credentials: Having a title like Certified Investment Management Analyst (CIMA) or Certified Private Wealth Advisor (CPWA), among others, proves the person has met the industry standard for the skills needed within this career. 
• SEC registration: The SEC’s database shows an adviser’s or investment firm’s records—for instance, if they’re licensed by the SEC and registered through the state or with the Financial Industry Regulatory Authority. The database also records claims or reports filed against them.
• Fees: Each wealth manager may have different fees based on their services and experience level.

Wealth management services help people with a high net worth make sure their assets are protected and well managed. Those services are typically reserved for clients above a certain financial threshold. 

However, financial planning can benefit anyone. Learn how setting financial goals can help individuals prepare for a successful financial future. And if you have more questions, consider reaching out to a financial adviser.