What’s the difference between a Financial Planner and a Wealth Manager? Sorry to let you down, but that’s not a setup for a joke. It’s a legitimate question. If you’ve ever watched golf on TV, you’ve probably seen a few hundred commercials for (insert name here) Wealth Management. Apparently, research shows that a lot of wealthy people watch golf.
What is Wealth Management?
What is wealth management, and do you need it? To begin with, wealth is a subjective term. Do you consider yourself wealthy? That’s not a simple question. The SEC defines a “high net worth individual” as someone who has more than $750,000 of investable financial assets or whose net worth exceeds $1.5 million. Some might consider themselves wealthy with much less in assets, and others may think they need more to be considered wealthy. In either case, if you have that much in financial assets, it would make sense to at least have a plan for how you are investing and protecting those assets and some professional help carrying out that plan.
Wealth management generally refers to financial services intended to grow, manage and help protect wealth. This can include investment management, risk management/insurance, estate planning, tax planning, and charitable giving strategies. Additionally, wealth management firms may also provide accounting and tax services. Some offer trust administration and banking services.
What is Financial Planning?
According to the Certified Financial Planner Board of Standards, “financial planning involves looking at a client’s entire financial picture and advising them on how to achieve their short- and long-term financial goals. From saving for education and planning for retirement to effectively managing taxes and insurance, financial planners develop valuable relationships with their clients to provide them with confidence today and a more secure tomorrow.” That sounds a lot like wealth management. Wealth management can be thought of as financial planning for high net worth individuals with trust, tax, accounting and banking services added on top.
Do you need a Financial Planner or a Wealth Manager?
To become a Certified Financial Planner™ practitioner, each of the planners at Starks Financial had to take and pass courses in estate planning, tax planning, risk management, investment planning and general financial planning. We also had to pass an extremely difficult examination and meet experience requirements to earn our credentials. We have to adhere to rigorous ethics standards and complete considerable hours of continuing education to keep our credentials.
One doesn’t have to earn a specific credential to call oneself a Wealth Manager. It’s more of a marketing message for potential clients, signaling they work with very wealthy individuals. So, first make sure your “Wealth Manager” is a credentialed financial planner.
Are we Wealth Managers? Do we work to grow, manage and help protect our clients’ wealth? Yes, of course. We are knowledgeable about estate and tax planning and charitable giving strategies and offer trust services through Raymond James. But, we just don’t like to call ourselves “Wealth Managers.” While some financial planners may use the term to scare off potential clients with only modest amounts of wealth, we believe everyone should have access to high-quality financial planning.
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Any opinions are those of David Werle and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notices.
Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation. Prior to making an investment decision, please consult with your financial advisor about your individual situation. You should discuss any tax or legal matters with the appropriate professional.