Managing investments, tax strategy, estate planning, and more can be complex — especially if you’ve recently had a major change to your financial circumstances. While some may benefit from the guidance of a financial advisor, certain households require more. That’s where wealth management can come in. But what is wealth management, exactly?
Wealth management is an integrated approach to managing finances that coordinates financial planning, investment management, tax strategy, risk management, and estate planning. Broader and more comprehensive than even private banking, wealth management takes a holistic view of all those areas to ensure that decisions in one area — for example, tax strategy — are coordinated with those in other areas, such as estate planning. Typically structured as an ongoing relationship, with the scope of services defined in an agreement with a financial advisor, wealth management is not inexpensive; so it’s generally most worthwhile for affluent households with complex financial situations, or those with recent life changes that have transformed their finances, such as a large inheritance or the sale of a business.
Key takeaways
Wealth management is a coordinated set of services that combines comprehensive financial planning, investment management, tax strategy, estate planning, and risk management in one integrated plan.
It is typically for affluent individuals and families with complex financial situations, although the need is often triggered by life events (such as a business sale) rather than a set asset threshold.
Wealth management differs from financial planning, asset management, and private banking because it is broader in scope and typically entails ongoing involvement, touching many areas of family life.
Costs commonly take the form of a percentage of assets under management or a flat planning fee, with minimums varying widely by provider.
Evaluating a wealth manager is as much or more about trust issues — fiduciary alignment, transparency, and firm stability — as it is about returns.
Wealth management isn’t necessarily about making money
One of the biggest misconceptions about wealth management is that it’s just about growing wealth. That’s only half the story — it’s equally about providing wealth protection, optimizing tax obligations, and easing the administrative burden for clients so they can spend less time managing their wealth, and more time living their lives.
Wealth management is offered by individual service providers and larger firms, which often draw on the expertise of several subject-matter experts to serve clients. The cost structure varies, but it’s often an annual percentage of assets under management. And while the process may start with a one-time consultation, it’s typically an ongoing relationship-based service that can span years and even decades.
One element that sets wealth management apart is its comprehensive, top-down approach. While a wealth manager’s specific title can vary depending on their registered capacity, a good one will understand how each independent aspect of your finances interact, both today and years from now. For instance, a wealth manager can help you optimize your investment holdings to be as tax-efficient as possible, while also mitigating risks that might not be apparent now, such as the likelihood of a recession but could manifest themselves at some point.
What does a wealth manager actually do?
A wealth manager works with you to create, implement, and monitor a comprehensive financial strategy for your household. The workflow is generally a combination of these phases:
Discovery: Wealth management starts by learning about your financial situation, gathering information, and asking questions not just about finances, but personal goals and aspirations for your family.
Comprehensive financial planning: An essential element of wealth management is identifying short- and long-term financial goals — even family goals that extend past your lifetime — building a comprehensive plan to reach them.
Implementation: Taking steps to implement the plan into action, often drawing on the expertise of several specialists (CPAs, investment managers, estate planners, etc.).
Ongoing review: Checking in over time to monitor progress and adjust the financial plan and items to be implemented. This may be done on an annual basis but often occurs more frequently, and even on an ad hoc basis in response to economic or life events.
The actual day-to-day responsibilities of a wealth manager generally involve coordinating services and guidance across specialists (tax, insurance, legal, investment, etc.), while interfacing directly with clients. They serve as a single point of contact for you while drawing on specialists' expertise.
Wealth management and how it relates to financial planning, asset management, and private banking
There are many similar-sounding services in the world of financial management — here’s simple shorthand for how to tell them apart.
| Primary focus | Scope | Typical client | Ongoing vs. Project-based |
|---|---|---|---|---|
Wealth management | Coordinate all aspects of a client’s financial life | Retirement planning, income and wealth protection, estate planning, investment management, tax planning and tax services, philanthropy, risk management, and more | Affluent households, individuals, business owners | Primarily ongoing |
Financial planning | Planning for specific financial goals | Retirement planning, budgeting, cash flow planning | Individuals and affluent households with relatively simple finances | Either |
Asset management | Managing investment portfolios | Investment/fund selection, risk management, portfolio construction, investment advice, asset allocation strategies, performance monitoring | Individuals and affluent households | Ongoing |
Private banking | Personalized banking services | Deposits and withdrawals, cash flow management, credit services | High-net-worth households | Ongoing |
While specifics can vary from one firm to the next, generally speaking, wealth management is the most comprehensive of these services, because it incorporates and coordinates all of them to help ensure you meet your ongoing personal, family, and financial goals. It’s worth noting that some private banking services include elements of wealth management, but these offerings tend to be anchored in banking services.
Who wealth management is for
Wealth management is generally best for high-net-worth clients and households with relatively complex financial situations. Each provider has its own set of minimums and guidelines, but many wealth management firms require $1 million or more in investable assets.
Keep in mind that asset level alone doesn’t necessarily determine a client’s fit for wealth management. A high-net-worth individual with very simple finances may not need a wealth manager, for instance. Likewise, a middle-class household that has recently had a major financial change (inheritance, sale of business, etc.) may also benefit from wealth management, despite not necessarily falling into the traditional “high net-worth” category.
How wealth management connects to risk and income protection
Wealth management is focused on preserving wealth just as much as it is growing it. Skilled wealth managers will implement insurance products to protect wealth, while also utilizing risk management strategies in investment portfolios.
Financial products like life insurance, annuities, and disability income insurance can all play a key role in your financial strategy by protecting the very income that generates wealth in the first place. Wealth managers can help you select these products and understand how they fit into your broader financial picture.
Life is not always predictable. An optimal wealth management strategy will balance wealth accumulation with wealth preservation to create a sustainable, balanced — and help ensure your ongoing financial wellness in a wide range of personal, business, and broader economic scenarios. What does wealth management cost? There are a few different cost structures that wealth managers use. When looking for service providers, you may find one or more of the following fee structures:
Assets under management (AUM): An annual fee based on a percentage of the assets the wealth manager is overseeing. A range of around 1% to 2% per year is standard.
Flat fee: A flat upfront fee charged to construct a wealth management plan. Often combined with a smaller AUM fee.
Hourly: An hourly fee for advice and administrative assistance. This is less common for full-fledged wealth management services.
Hybrid: A mix of fee structures, most commonly an annual AUM fee and a flat fee.
It’s important to consider the long-term impact of fees when selecting a wealth management partner. Fees compound over time, and a higher fee can result in substantially less asset growth over the long run. On the other hand, these fees are needed to pay for the many, and often time-intensive, services provided.
Ultimately, you want to find wealth management services where the value provided outweighs the fees charged. Remember that wealth management is not just about maximizing investment returns — it’s about providing financial confidence for you and your family, while freeing up time to focus on life instead of money.
How to evaluate a wealth manager (and red flags to watch out for)
When selecting a wealth management partner, here are some key things to look for:
Fiduciary status: A fiduciary is legally obligated to act in the best interest of their client, while a non-fiduciary is not. A fiduciary must always recommend an approach that is appropriate for your goals, circumstances, risk tolerance, and priorities. These professionals are required to disclose or manage any potential conflicts and not let their compensation or convenience come before your needs.
Fee transparency: All wealth managers will charge fees, but how transparent they are about their fee structure can vary significantly. When evaluating your options, ask for a fee sheet and ask any clarifying questions you may have.
Relevant credentials: Credentials such as Certified Financial Planner (CFP), Certified Private Wealth Advisor (CPWA), and other professional designations indicate that a provider has met certain criteria and passed an exam administered by an industry organization.
Firm stability and financial strength: Many wealth managers operate under the umbrella of a larger firm. Look for well-established, stable firms with a good reputation and, ideally, many years of experience.
Breadth of services: One of the big advantages of wealth management is that it offers a wide range of services under a single firm. Look for a service provider that offers most or all of the services you’re looking for. (tax planning, investment management, estate planning, etc.)
Clarity of communication: Look for a provider that can clearly communicate their value proposition — and one with a reputation for good communication with existing clients.
A good wealth management partner should inspire confidence through a combination of industry experience, relevant credentials, and a clear value proposition. As an example of what to look for, Guardian offers comprehensive wealth management backed by 160+ years of experience and an A++ Superior Rating from A.M. Best.1
Red flags to watch out for when selecting a wealth manager
On the other hand, here are some things to look out for that may signal the provider is not the best fit:
Lack of fiduciary commitment: Many reputable firms offer both fiduciary and non-fiduciary services, with the latter typically meaning that they can sell some commission-based products or services. However, your specific wealth advisor should be designated as a fiduciary and bound to put your interests first.
Returns-based promises: Any advisor that advertises a specific rate of return — or even one who promises high returns more vaguely — is likely best avoided. Nobody can guarantee specific returns, and advertising otherwise is a clear red flag.
High-pressure sales tactics: If you feel like you are being aggressively sold to, that could be a red flag. Good wealth management providers will know their worth and will clearly communicate what they offer, but leave the decision up to you.
Opaque fees: The fee structure should be clearly communicated. If you ask about fees and are given an unclear answer, that’s a good sign to look elsewhere. Many firms are compensated via a combination of client-facing fees and commissions on products they recommend. There’s no issue with either revenue source, so long as the firm is transparent about its model.
Importantly, make sure they offer the range of wealth management services you need
As we’ve said, wealth management encompasses a number of services. Many firms offer several services under one umbrella, while others may specialize in a specific category or partner with others to round out their offerings. Here are some of the most common types of wealth management services:
Financial planning: Evaluating current financial standing, establishing goals, and constructing a plan to meet them. This is an essential element of wealth management.
Investment management: Selecting and purchasing investments that match your risk tolerance, establishing an appropriate allocation across different asset classes for your portfolio, and making adjustments over time.
Tax planning: Establishing a plan to minimize tax liability and prepare for expected tax requirements. Some wealth management firms also offer tax filing services, but most refer clients out to partners for actual filing.
Estate planning: Planning for an eventual transfer of wealth and assets to beneficiaries. Combines tax planning strategies with implementation of wills, trusts, and other legal documents.
Risk management: Managing insurance policies and other risk mitigation tools to protect wealth and overall well-being.
Should you consider wealth management?
Wealth management can help high-net-worth individuals and families achieve desired financial outcomes with less stress and less direct involvement in day-to-day financial management. Using a wealth management service is worth considering for many households, particularly those with assets exceeding $1 million.
However, it’s not just based on your financial resources or asset level. If you are facing a complex financial situation and want guidance, or you simply don’t want to stress about managing your wealth, these services can be helpful. On the other hand, if you have a very simple financial situation, you may be able to self-manage or use only an accountant for your tax planning needs.
Guardian can help
You can learn more by exploring Guardian’s Wealth Management Resources online. Or, if you’re ready to talk about your needs, or even want to know if wealth management is right for your current situation, a Guardian financial advisor can help. Here's how to find someone near you:
Frequently asked questions about wealth management
Many wealth management services have a minimum balance of investable assets. A minimum of $1,000,000 is common, though each provider will have different requirements. Whether or not paying for wealth management is worth it for you depends on the complexity of your finances and how involved you would like to be in ongoing management and financial decision-making.
Wealth management is generally a comprehensive approach that covers investments, tax planning, estate planning, risk mitigation, and more. A generic financial professional may cover some of these services, but their offerings and scope of expertise are more limited than those of a full wealth manager.
Private banking services generally focus on cash management, credit products, and other banking services, while sometimes also offering investment management. Wealth management is broader, covering risk management, estate planning, tax optimization, portfolio management and more. Both services target higher-net-worth individuals and families, and some private banking services also offer wealth management.
Individuals working in wealth management for larger firms are paid a salary and/or commissions, just like any financial advisor. As for the services themselves, wealth managers can make money through a combination of fees charged to clients (both one-time and ongoing) and, often, from commissions paid from products and services they recommend to clients. In any case, the fee structure should be completely transparent at the outset.
Note that a fiduciary wealth manager may also sell some commission-based products if they are dually registered. However, in addition to disclosing the fee structure and conflict of interest, per U.S. Securities and Exchange Commission (SEC) guidelines, the professional must still prove that the product recommended is the absolute best option for you, not just a profitable choice for them.3
