When planning for major life events like buying a house, getting married, or retiring, it is essential to hire a wealth manager who can assist in making the most of your money.
Wealth managers provide investment advice, retirement planning, tax advice and estate planning. They collaborate with other financial experts such as accountants and attorneys to craft a comprehensive strategy tailored to their client’s requirements.
Understanding Wealth Management Basics
Wealth management is an extensive service that combines financial advice, tax guidance and estate planning. While not everyone needs a wealth manager, those with substantial assets or those in higher tax brackets may find this type of assistance beneficial.
Wealth managers take into account their clients’ financial goals, risk tolerance, time horizon and other characteristics to craft an investment strategy tailored to their individual needs. Furthermore, they conduct regular evaluations and modifications of this strategy as those needs evolve over time.
They may be compensated on a commission basis or flat fee basis. It’s essential to understand your wealth manager’s compensation model so you can determine if they’re the right fit for you. Furthermore, working with a fiduciary is recommended since they have legal obligations to put your needs first.
How a Wealth Manager Can Help You
Wealth management encompasses a broad range of financial services, such as investments, tax planning and estate planning. No matter your level of wealth, having access to an experienced wealth manager is critical in making informed decisions and ensuring your investments grow in line with your objectives and values.
A wealth manager also assists you in managing the risks that could derail your financial plans. These could include taxes such as income taxes, capital gains taxes, gift and estate taxes and generation-skipping transfer taxes (GSTT).
Wealth managers must be able to tailor their advice according to each client’s individual needs, objectives and values. This involves collecting investment information, creating comprehensive financial plans, suggesting investments and monitoring performance over time.
When Is the Right Time to Hire a Wealth Manager
There are various reasons you might need to hire a wealth manager. One of the most frequent is when you don’t feel confident handling all of your financial affairs on your own.
Another scenario may arise if you wish to shift your investment focus from creating wealth to conserving it. This could be done for various reasons such as retirement, inheritance or estate planning.
No matter why you decide to hire a wealth manager, it is always essential that you take into account your own priorities before making any decisions. An experienced wealth manager will assist in setting objectives and crafting an action plan that supports those goals.
How is a Wealth Manager Compensated?
Wealth managers are financial specialists that specialize in matters concerning wealthy individuals. These may include investment advice, tax planning, estate planning and more.
High net worth clients often hire them and are typically paid through a grid model where compensation is based on assets under management (AUM). While compensation levels vary between firms, it’s not uncommon to see an annual average range between 100k – 200k.
As a wealth manager, your salary and grid payout will likely be determined by the amount of gross revenue produced for the firm (usually 20% or 30%). Over time, as your revenues increase, however, these will reduce until eventually there’s nothing left for you except an increasing reduction or elimination in salary.
Final Thoughts on Wealth Management
Planning for your financial future or safeguarding the legacy of those you cherish, professional wealth management provides a range of services to assist. They’ll collaborate with you in creating an approach for growing and protecting your wealth, ensuring it lasts generations into the future, while also helping you reach other life milestones.
Despite strong growth prospects, the industry faces disruption from low-cost investing, increased regulatory scrutiny and the need to invest in technology. Successful firms are adopting a digital operating model, data-driven insights and platform mindset while still upholding the personal relationship that defines wealth management.
