Wealth Manager vs. Financial Advisor: Here’s the Difference and How To Choose the Right Option for You
Growing your wealth through investing is a crucial part of long-term financial stability for you and your family. There are many ways to invest: stocks, bonds, mutual funds, ETFs, real estate, etc. — the list goes on. If you’re a self-starter who puts their best foot forward in terms of financial planning, kudos to you. However, others need more guidance.
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In a recent press release about Northwestern Mutual’s 2023 Planning & Progress Study, it was revealed that Americans with some sort of advisor are much more confident about their financial future. However, only 37% of Americans work with one.
There are two terms for financial professionals that are often used interchangeably: wealth manager and financial advisor. However, these two professionals are different and it’s important to understand the differences and similarities to determine which one is best for you.
Wealth Manager v. Financial Advisor
CNBC defined a financial advisor as “someone who offers guidance on various topics including retirement, tax planning, insurance, saving, and estate planning.” They can help create an investment strategy and providing investment advice is one of the main services financial advisors provide. They’re also licensed to advise on and work with specific securities.
On the other hand, a wealth manager is defined as “a financial professional who advises almost exclusively individuals with a high net worth (HNWIs).” Ultimately, this is the biggest difference to note between a wealth manager and a financial advisor.
While both professionals offer financial advice, financial advisors are best for those looking for financial, guidance, advice, and planning. However, choosing a wealth manager is better if you’re wealthy and you’re looking for high-level guidance to grow your wealth to new heights.
Do You Need A Financial Professional?
The short answer? Yes.
Those who consult with a financial professional over the long term, whether a wealth manager or a financial advisor, should see better financial results.
Which Financial Professional is Right For You?
Choosing the right financial professional for you is a personal choice. If you’re just starting on your financial journey, a financial advisor might be your best bet. If you’re already wealthy, a wealth manager would be a better choice.
Here are some factors you’ll want to consider before deciding on a wealth manager or a financial advisor:
Cost of services
Fee structure
The manager or advisors’ investment philosophy
If you’re looking for a lower-cost option, you can also consult a robo-advisor which collects information about your investment preferences, goals, risk tolerance, and time horizon. With that information, a robo-advisor makes portfolio recommendations that automatically adjust over time. It’s a hands-off method of financial management if you’re looking for financial planning on a budget.
Overall, financial planning from an early age can make a huge difference in how much money you have by the time you retire. The more money you can wisely invest early on, the more time your money has to compound and grow exponentially.
Learn More: 11 Uncommon Investments That Can Actually Make You a Lot of Money
Asking for help is never a bad thing, especially when it comes to your finances.
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This article originally appeared on GOBankingRates.com: Wealth Manager vs. Financial Advisor: Here’s the Difference and How To Choose the Right Option for You
