Choosing an Advisor
Zoe Team
4 mins read
Wealth advisors offer comprehensive services like estate, insurance, and philanthropic planning beyond standard investment management.
Distinguish between general financial advisors and wealth advisors based on the complexity of your financial needs and assets.
Look for trusted wealth advisors who prioritize your goals through holistic services like cash flow and tax strategy management.
They provide holistic guidance, including trust services, insurance, philanthropic planning, and complex cash flow management.
Wealth advisors typically focus on high-net-worth individuals, offering a broader, integrated suite of services beyond basic asset management.
Consider one if you have complex income streams, large assets, or specific estate and legacy planning needs that require integrated support.
There is a common misconception that only the extraordinarily wealthy can use the services of a wealth management advisor. While high-net-worth individuals are often the most keen on hiring an advisor, the value of wealth management extends far beyond investment advice for the ultra-rich. Wealth management entails all aspects of a person's financial life. A wealth advisor offers individuals a holistic approach that encompasses all the services needed to plan for current and future needs and manage and protect wealth. By working with other professionals like attorneys and accountants, they can help serve their clients holistically. They often work with clients with complex financial needs and demand customized and personalized approaches. As such, wealth managers tend to require a minimum level of investable liquid assets to manage.
Their service tends to be fitting for high-net-worth individuals with complex needs. In short, a wealth management advisor is a financial professional who assists affluent individuals in managing their wealth holistically.
Broadly speaking, wealth advisors are their clients' personal Chief Financial Officers (CFO). As a subcategory of a financial advisor, a wealth manager focuses on managing assets of high earners. Their purpose is to protect and grow their client's existing wealth while considering the whole financial picture.
Wealth advisors combine several financial cornerstones to provide a customized service. For instance, wealth managers offer investment management services that assess your risk tolerance and capacity, financial objectives, and time horizon. They then create a personalized portfolio design to help you achieve your investment goals. Wealth advisors provide an additional white-glove service by fine-tuning their recommendations to unique financial circumstances. Other vital services they provide are tax and estate planning. Tax planning allows you to optimize taxes through tax harvesting and strategically determine which account types you allocate investments to. Estate planning ensures your affairs are in order if something happens to you.
Other services offered by wealth advisors are:
Philanthropic planning
Insurance management
Socially responsible investing
Trust services
Cash Flow Management
A life transition is an ideal time to hire a wealth management advisor. For example, if you’re getting married, you’ll have to navigate managing and potentially merging a range of investments, savings accounts, and potential properties. That means you should get help to navigate legal, tax, and investment matters. A wealth advisor can ease the hassle by creating a holistic financial plan for you and your partner.
A financial advisor is an umbrella term encompassing a range of economic experts, including wealth advisors. They advise on anything financial, like investments, financial planning, or tax strategies.
Wealth advisors are there for more than just advice. They manage the complexity that comes with your finances. They carefully consider your lifestyle, goals, cash flow, debt, and assets. They can align investment income and growth with your goals, protect assets, and optimize taxes.
One thing people often check is whether an advisor is a fiduciary. A fiduciary has a duty to act in the client’s best interest. Many people also look at whether an advisor has worked with clients like them and their families. A strong working relationship matters to a lot of people, too.
During interviews, some people ask about an advisor’s experience with clients who have similar goals. For example, a person who is getting an inheritance may want to know how many of the advisor’s clients have dealt with inheritances and trusts.
Credentials can also show an advisor’s training and knowledge. Some common ones include the certified financial planner (CFP®), the chartered financial analyst (CFA®), the certified public accountant (CPA), and the chartered financial consultant (ChFC).
People who are near retirement often have more than one source of income. These can include Social Security, pensions, retirement accounts, and investments. A retirement wealth advisor is one kind of professional who may help with this. Taxes can play a big part in how these income sources are used.
An advisor may help build a plan that lays out how different income sources could be used over time. This can start with an estimate of how much money a person may want to spend each year in retirement. The estimate depends on that person’s goals and situation.
An advisor may also look at required minimum distributions (RMDs). These are amounts the IRS requires people to take from certain retirement accounts once they reach a set age. Some advisors look at which accounts to take money from first. The idea is to let other assets stay invested longer, which may help with taxes. Extra income that is not spent could be put into another investment account.
Wealth management advisors often offer many services in one place, such as tax planning, cash flow planning, and estate planning. Some people find it helpful to have one team look at their whole financial picture.
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