What Is Wealth Management, and Should You Use It?

But what types of wealth-management services are there? Do you really need them? And how much do these services cost?

Traditional Wealth Management

Wealth management typically takes a comprehensive approach. It offers a broad range of services. Some of these include:

• money management
• financial planning
• investment advice
• estate planning
• life insurance
• retirement planning
• tax services
• estate planning
• accounting

Wealth-management advisers use a consultative process. The adviser gathers information about a client’s wants and specific situations. The wealth manager then tailors a strategy using their services to help the client achieve their goals. They are holistic in their approach to a client’s financial needs and goals.

A wealth-management firm would not only invest these funds but also provide will and trust services for estate planning and tax minimization.

Family Office Wealth Management

A family office is a type of wealth-management firm. It is more for ultra-high-net-worth clients. They handle typical wealth-management needs as well as budgeting assistance, services to educate about money, and concierge services for non-financial needs such as schooling, travel, and household management.

How Much Assets Do You Need to Have a Wealth-Management Adviser?

The amount of money required depends on the wealth-management firm. It can differ significantly based on the needs of the client and the services offered. Typically, wealth managers and their firms will set any minimums related to investable assets, net worth, or other metrics.

But there is a number that makes sense for the individual to hire a wealth-management firm. According to Quadra Wealth, typically $2 million to $5 million in investable assets is the minimum that justifies the cost of having a wealth-management adviser.

But even if a firm has a minimum, a wealth-management firm may be willing to take the adult children of a high-net-worth client to guarantee that the wealth they inherit remains with their firm.

Individual Companies Have Various Asset Minimums

There are other minimums depending on the company. For example, Fidelity Private Wealth Management has specific requirements. It provides the individual with their own management team led by a Fidelity adviser and comprehensive financial planning and investment management.

According to Fidelity, the general eligibility is $2 million managed through an eligible account and $10 million of investable assets. It has a gross advisory fee of 0.2 percent to 1.04 percent.

But Fidelity does offer a lower-tier Fidelity wealth management and provides access to ongoing investment management based on the financial picture. The gross advisory fee is 0.2 percent to 1.5 percent.

How Much Do Wealth-Management Advisers Cost?

The fee for wealth-management firms is a percentage of assets under management (AUM). According to Quadra Wealth, this typically ranges from 0.25 percent to 2 percent. The fees are paid annually depending on the size of the client’s account. Normally, the fees are reduced if more is invested with the company.

Are Wealth-Management Services Right for You?

Although many wealth-management services will work with a range of clients, from a cost standpoint, it typically makes sense to consider a wealth management service if you have a minimum of $2 million to $5 million in investable assets.

Depending on the needs of the client, wealth-management strategies differ for each individual. For example, there are clients who want to build wealth, while others want to maintain what they already have.

Wealth-Management Alternatives

Because of the cost, wealth management may not be for everyone. But if you still think you need or want help, there are alternatives.

Both Fidelity and Vanguard have lower-tiered programs that can help you with your management of assets.

For tax-planning strategies, it’s advantageous to hire a certified public accountant (CPA). And if you need help determining how to pass down assets to heirs, an estate-planning attorney should help you.

Wealth Management Not for Everyone

If you need help managing your finances and investments, wealth-management services are a good option. However, because of their fees for AUM, the cost may outstrip the gains.

Look for alternative options if you don’t meet the requirements that make sense.

The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. NTD does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. NTD holds no liability for the accuracy or timeliness of the information provided.

From The Epoch Times