Private wealth manager vs financial planner: what’s the difference? | Financial advisers


The financial industry is better at finding new names for its products and services than the bartenders who whip up new drinks. In the defense of the industry, there are probably more ways to combine investments and financial plans than there are alcohol and soda. But do you really have to be both a “private wealth manager” and a “financial planner”, for example?


Many would argue in the negative and say that private wealth management is just a fancy term for financial planning that makes the manager in question more upscale. As Blanton is to Jim Beam; at the end of the day they’re both still whiskey. But the other side of the debate may be saying that the flavor each leaves on your tongue and the lump they leave in your wallet are far from interchangeable.

Likewise, the services and experience of working with a private wealth manager can be totally different from that of working with a financial advisor.

What is a private wealth manager?

“A private wealth manager will take care of more complex client situations such as advanced charitable planning, multigenerational estate planning, business succession, family governance (and) advanced portfolio tax management,” explains Nathan Imboden, a certified financial planner who is vice president and personal finance director. at Questmont Strategic Wealth Advisors. “This is done through a well-coordinated team of professionals,” which may include legal advisers, tax advisers and business consultants.

A private wealth manager will spend more time interacting with these other professionals on behalf of their client. There’s more work behind the scenes when you’re a private wealth manager, but it will help you maximize the time actually spent with your client, says Imboden.

Private wealth manager vs financial advisor

“There is no hard and fast definition for financial planners and wealth managers,” says Zach Ciampa, a certified financial planner at John Hancock. Therefore, there is a lot of overlap between the two roles and the services each provides.

That said, there are distinctions between the two. Here are some key differences between private wealth managers and financial planners:

  • Private wealth managers tend to deal with high net worth clients. A financial advisor can have clients with assets of $ 100,000 to $ 5 million, for example, while a private wealth advisor can work with clients who have more than $ 20 million.
  • Private asset managers are often more involved in asset management. “Asset managers generally manage clients’ assets and actively manage their portfolios,” Ciampa explains. Financial planners, on the other hand, are more likely to outsource asset management to other professionals.
  • Private asset managers offer a wider range of services. “While the two professionals provide basic financial advisory services such as goal planning, investment management services, and limited tax and estate planning, a private wealth manager plays a much deeper, more comprehensive role. more proactive (with) managing a client’s wealth, ”says Imboden.

Private wealth management fees vs financial planner fees

It is difficult to provide a comparison of fees for private wealth managers and financial planners. The fees charged often vary according to the services provided, which can vary considerably from one professional to another. What can be distinguished is the way in which private wealth managers and financial advisers generally charge their fees.

“Private asset managers typically assess fees based on assets under management (AUM),” Ciampa explains. Assets under management are the money and investments that you keep with your private wealth manager. For example, a private wealth manager might charge 0.5% of assets under management for a $ 10 million account, which equates to an annual fee of $ 50,000. Often AUM fees are evaluated on a sliding scale, with larger account balances qualifying for lower fee levels.

“Most companies like to divide that annual amount into four quarterly payments,” Ciampa explains. In the example above, this would amount to $ 12,500 per quarter.

Financial planners tend to be more varied in how they charge their fees. They can also use the AUM model or use a different fee structure. Financial planners can charge a one-time flat fee, such as $ 2,000 for a full financial plan, or they can charge an hourly fee, such as $ 250 an hour, Ciampa says.

The important point when evaluating the fees of a private wealth manager and financial planner is to determine if the value you receive is worth the price you pay. “At the end of the day, customers should always ask how they will be billed for the services and / or products they are looking for,” Ciampa said.

What distinguishes a successful private wealth manager from a financial planner?

Given the distinction between their two roles, a successful private wealth manager requires a different set of skills than a successful financial planner requires.

How to become an effective private wealth manager

“Both professionals must be able to prove to clients that they are able to help them with their wealth planning needs, but the private wealth advisor must also prove to other experts that he is able to lead. the wealth planning process, ”Imboden said. “It requires advanced skills in managing a team, rather than just managing a customer relationship.”

Wealth managers also need more investment management expertise. “It’s important for them to get an appropriate risk-adjusted return,” Ciampa said. “They must manage their wealth in an efficient and prudent manner.”

How to be a good financial planner

Since financial planners often do not directly manage their clients ‘investments, their skills may lie elsewhere, for example in understanding their clients’ goals and using them to create a plan that will help clients achieve those goals. “It is crucial to present all the options to achieve these goals, while trying to take into account as many variables as possible,” Ciampa said.

Whether it’s a financial planner or a private wealth manager, the core of the job remains the same: they’re there to help clients achieve the financial future they want. The only difference between a financial planner and a private wealth manager is the level of involvement they take in the process.


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