Read on to find out which type of guidance is right for you
As you look to secure your financial future, it’s critical to receive guidance from those who are best equipped to understand your particular needs and goals. If you’re currently looking for such guidance, your first question might be whether you need a financial advisor or a wealth manager.
According to Dan Wagner, CEO and founder of the Upstate’s Wagner Wealth Management, a successful advisor-client relationship begins with a mutual understanding of what “wealth” means.
“I think the key difference is in the key word ‘wealth,’” says Wagner, who has 16 years of experience in the industry. “Obviously, everyone defines that differently. For the average person out there, it can be hard to decipher that sometimes.”
As Wagner sees it, “a financial advisor is going to advise most folks on their financial well-being, which may be retirement planning, some simple estate planning, maybe some college planning.”
On the other hand, he says a wealth manager works with people who have more complex needs. Often, successful entrepreneurs turn to a wealth manager.
“With business owners, all of a sudden you can have a lot of different businesses,” he explains. “They can have an operating company that they own; they probably have real estate for the company, which they either own or lease in a separate LLC company; sometimes there are multiple investments in real estate under different companies. Then you’ve got a much more complex need for planning in and around the business owner.”
Finding the Right Financial Advisor
Wagner compares the search for a financial advisor to finding the right insurance agent.
“If you walked into an insurance agency and said you needed eight or nine coverages—your car, your home, your boat, your motorcycle—you’re going to walk out of there with the best products they can offer you, but they’re all going to have the same name on them a lot of times,” he explains. “If you went to an insurance broker, you may have Allstate covering your beach house and this one covering your lake house—you’re going to get more customized [coverage].
“In our industry, it’s kind of the same thing,” he continues. “If you get with one of the big banks that says it has a wealth-management division, then you’re going to get plugged into whatever model they have to service a relationship like yours.”
The best way to select an advisor? “Do your due diligence on whatever firm or firms you’re looking at and what they offer,” Wagner suggests, and also ask whether a firm has “a non-conflicted process where they are going to act in the best interest of the client and have the experience to do that.”
Under Advisement
According to Investopedia.com, both financial planning and wealth management are types of financial advising.
Financial Advisor:
Primarily assists with lifestyle planning, such as budgeting, cash-flow planning, retirement.
Caters to middle-income clients who have a strong need to make their money go as far as possible.
Wealth Manager:
Provides services required primarily by high-net-worth individuals, such as capital gains planning and risk management.
Generally has more experience with complex offerings such as estate or business-succession planning.
