February 26, 2024

The goal of wealth management, a subset of financial advice, is to safeguard and increase the wealth of high- and ultra-high-net-worth individuals. A wealth manager often evaluates a client’s assets, objectives, and way of life before offering personalized guidance on estate planning, tax planning, charity giving, and other topics.

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Why is it vital to manage wealth?

Your financial situation becomes more complex as your wealth increases. Over time, factors like inflation, capital gains taxes, inheritance taxes, and fees can erode your wealth and reduce the amount of money you have today and leave for your loved ones. In order to safeguard and increase your fortune and that of your successors, wealth management helps to reduce these risks.

Important goals for managing wealth

Wealth managers customize their recommendations to each client’s objectives and financial status. However, the broad approaches employed in wealth management are intended to:

help you minimize risk while protecting and growing your money.

Establish and create plans to reach your financial objectives.

Consider your time horizon and risk tolerance while managing your investments.

Over time, lessen the burden of federal, state, and municipal taxes by utilizing tax-efficient practices.

Make sure you have enough insurance (life, health, disability, long-term care, umbrella, and property coverage, for example).

Plan ways to leave money to recipients, including your family.

Increase the impact and reach of your philanthropic contributions.

What is the price of a wealth manager?

The fees that wealth managers typically collect are determined by a proportion of the assets they manage (AUM). Typically, the amount you pay should be around 1%, but depending on the size of your portfolio, it may be less or more. For instance, you may pay 0.50% at $10 million AUM or 1% at $1 million AUM. This implies that the yearly charge may be $50,000 with $10 million in AUM or $10,000 with $1 million in AUM. Wealth managers may bill on an hourly basis or charge a set annual fee for their services.

How to find a reputable money manager

Finding and contrasting money managers online is made simple with the help of an aggregator. For instance, you may match yourself with prescreened financial advisors in your region by completing a brief online questionnaire at SmartAsset. You are able to go over your matches, schedule interviews, and choose an adviser that best suits your requirements and tastes. Obtaining recommendations from close friends, relatives, coworkers, and other business connections is also beneficial.

How to pick a financial advisor

Selecting a wealth manager stands to be among your most crucial financial choices. After all, your wealth manager will be responsible for both making sure you leave a legacy for your loved ones and managing your wealth growth and protection (perhaps for decades). You must thus take the time and make the effort necessary to make an informed choice. When selecting a wealth manager (or wealth management business) to manage your finances, keep these five SmartAsset recommendations in mind.

Find out what kinds of clientele the company handles. Do its clientele share your financial circumstances? This might help you determine whether their level of experience matches your requirements.

Compare the offerings of each company. Certain companies focus on particular services, such investment management. Make sure the company’s services meet your objectives and demands and that you will receive customized guidance rather than generic advise.

Check the costs for each firm. Wealth managers may charge you tens of thousands of dollars annually for their services; they do not work for free. Think about the costs and the value you will receive for your money.

Learn the client communication methods used by each company. Your financial manager may not require frequent communication, but you should be able to get in touch with them quickly if necessary.

Run a background investigation. Even with billions in AUM, a wealth management company’s ability to service its customers is not certain. Examine each company’s records with the Securities and Exchange Commission (SEC) and read evaluations from the Better Business Bureau (BBB) and other consumer websites.