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Are you a high-net-worth individual (HNWI)? If you have $250,000 or more in cash assets (money in banks or brokerages), you could probably use a variety of different financial professionals to help you deal with all of your money management needs.
Alternatively, you can work with a wealth management firm. These companies can meet a long list of your financial needs, from managing your investment portfolio to ensuring your wealth gets passed on to your heirs.
Learn more about how wealth management works and whether it’s right for you.
What is wealth management?
Wealth management is a financial service that provides affluent individuals with comprehensive financial planning. In short, wealth managers are there to help wealthy clients preserve, grow, and pass on their wealth.
When you go to a wealth management firm, you can work with a credentialed financial professional who develops a customized plan based on your specific financial goals, values, and risk tolerance. This can include assisting you — and in some cases, your direct family members — with any of the following:
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Investing and growing your wealth
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Tax-efficiency planning
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Philanthropy planning
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Insurance consulting
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Estate planning
How much do wealth management services cost?
The cost of wealth management services depends largely on the company you choose to work with. Here's an overview of your options.
Fee-only systems
If you go to a fee-only firm, you'll typically pay a set annual fee that's equal to a percentage of your assets under management (AUM), also known as a wrap fee. Wrap fees can cover:
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Money management
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Trades
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Broker advice and support
Fee-only firms usually charge anywhere from 1% to 3% of your AUM, with higher asset balances qualifying for the lowest fees. How much does that fee add up to each year? If you have $300,000 under management and your fee is 2%, your annual fee would come out to $6,000.
Commission-based systems
Another option is to go with commission-based wealth management companies. Instead of charging an all-inclusive fee, they usually charge an annual account or custodian fee, plus extra fees and/or commissions for specific transactions such as wire transfers and stock trades.
However, because of their fee structures, advisors at these companies may be less focused on helping you grow your net worth and more focused on encouraging you to buy and sell specific products.
Here’s a look at some examples of wealth management requirements and fees from major financial institutions.
How to choose a wealth manager
Finding a reliable wealth manager takes a bit of research. Here are some steps you can take to find the right service:
1. Personal referrals
Check to see if anyone in your personal or professional network can recommend a wealth advisor they've had a positive experience working with.
2. Compare banks and advisories
Check to see if the bank or investment firm you work with offers wealth management services. Starting here can prevent you from having to move money to a new company unnecessarily.
As you compare services, take a close look at the fee structures and minimum asset requirements before reaching out to any firm.
If you choose a bank, you can also potentially qualify for waived banking fees and higher deposit rates, but there are potential drawbacks. You may have to open a specific checking and/or savings account, and your advisers may be incentivized to push certain bank products.
Wherever you go, be sure to look for fee-only structures and avoid commission-based structures.
3. Vet your advisor
Before choosing which agent you'll work with at a bank or advisory, use BrokerCheck to confirm their credentials (and to search for any complaints against them). Your advisor should have one or more of the following credentials:
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Certified Financial Planner (CFP)
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Chartered Financial Consultant (ChFC)
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Retirement Income Certified Professional (RICP)
You can also look for someone who's experienced working with people in your field. For example, you might want someone who specializes in serving corporate executives or who works primarily with lawyers.
Is wealth management worth it?
Fee-only wealth management services can be worth the cost for high-net-worth individuals. If you take the time to find an experienced, credentialed advisor at an established firm or bank, you'll benefit from having an individual who can help you tackle a comprehensive list of financial needs.
If you're not a high-net-worth individual, there are other financial services better suited to your needs. Instead of seeking a wealth manager, you might consider hiring a financial advisor for help with things like retirement planning and investment advice.
If you need help with challenges such as managing a tight budget, dealing with high credit card payments, or living paycheck to paycheck, reaching out to an NFCC-certified credit counseling agency is a better place to start.
Wealth management FAQs
What does a wealth management job entail?
A wealth manager's job is to help high-net-worth individuals protect and grow their wealth. They do this by analyzing their clients' assets and goals and designing individualized plans for investing, estate planning, lowering taxes, and more.
How much money do you need to have a wealth manager?
Each wealth management agency has different requirements for how much money you need to place under their management in order to work with them. You can potentially find a wealth management agency that will work with you if you have at least $250,000 in cash assets.
What is the 72 rule in wealth management?
The rule of 72 is a formula you can use to estimate how long it will take your investment to double in value. To use the formula, you simply divide 72 by your expected rate of return. For example, at a 6% return rate, the formula would be 72/6 = 12 years.
