Working with a financial adviser or a wealth management firm is the key to alleviating the burden of constant financial monitoring. Enlisting the services of a solid financial team enables individuals to focus on the bigger picture of their financial goals. 

The question then becomes: Do I need a financial adviser or a wealth manager? What’s the difference? On the surface, the duties of financial advisers and wealth managers seem to be interchangeable. However, after a closer look, you’ll find that the professions are distinctly different, and it’s important to be able to tell them apart.  

Financial advisers

Individuals at most income and net worth levels can benefit from working with a financial adviser. They offer a wide range of services, including general tax advice, budgeting, retirement planning, and insurance strategies. However, a financial adviser’s knowledge of many of these services can be limited. Complex financial situations often need to be referred to an outside professional.

Many financial advisers will create a financial plan for their clients for an upfront fee. These plans use the client’s current financial situation to make projections for achieving the client’s overall goals. Along with following through with lifestyle changes, be aware the plan often includes recommendations for specific financial products, such as insurance or investment funds, which may be backed by the adviser’s employer or affiliated vendors.    

Financial advisers may work independently or in conjunction with another financial institution, such as a bank or insurance company, and their compensation is often based on the products they sell. There are several different designations that financial advisers may receive, such as Certified Financial Planner (CFP) or Accredited Financial Counselor (AFC). Take note that not all designations equate to a rigorous licensing process. Some financial advisers may call themselves wealth managers even if they do not have extensive experience managing high-net worth portfolios.  

Wealth managers

In contrast, wealth management firms work exclusively with high-net-worth individuals who have complex financial needs. Wealth management clients often own substantial real estate holdings, run successful businesses, or are stewards of generational wealth. In addition to the services offered by a financial adviser, wealth management firms provide many specialized services that are tailored to handle these challenges, such as philanthropic planning, legal services, and business succession strategies. A wealth manager has refined the disciplines of the financial planning process, as well as the more complex aspects of tax strategy, implications of real estate investments within different business structures, IPOs, generation-skipping trusts, endowments, to name a few. 

The focus of a wealth management firm is process-driven rather than product-driven, ensuring that all aspects of their clients’ wealth work together to achieve their goals: both for them and their future generations. This process involves wealth managers striving to establish a trusting client-manager relationship and formulating a long-term plan to maximize their client’s wealth. By communicating with their clients regularly, they ensure the developed strategy continues to align with the client’s values and the lifestyle they aspire for themselves and their successors.

Although wealth managers customarily run their own firms, sometimes they may be affiliated with a larger organization or work for a wealth management division of a financial institution. Their compensation is usually fee-based on the assets they manage, not specific products. Unlike financial advisers, in general, wealth managers have years of experience working with in-depth, complex portfolios. This depth of experience gives wealth managers broader access to high-level professionals and financial products. 

The decision to work with a financial adviser or a wealth manager is based on an individual’s needs and level of financial complexity. Experience, knowledge, and trustworthiness are essential traits for a solid financial team. Overall, the most important factor to keep in mind is to work with a firm you can trust to look out for your best interests in the long run.

Dan Wagner is president of Wagner Wealth Management, which has offices in Greenville, Anderson, and Oconee counties. Call them at 864-236-4706 or visit www.wagnerwealthmanagement.com to learn more about the firm.