What Does a Wealth Manager Really Do?

By: JT Martin

The term “wealth management” is used often in finance, but what does a wealth manager really do? With trillions of dollars under management, wealth managers are responsible for an immense amount of capital and how they are being used. Many people outside of finance don’t even really know what these managers actually do to manage and invest their money and place a lot of faith in these professionals to do their jobs well.

Wealth managers are employed to manage and grow an individual’s or institution’s assets while managing risk and preserving their wealth over time. This definition of a wealth manager may be simple in its goals of growing assets and managing risk, but it entails many responsibilities for the managers. At its core, wealth managers are those who are professionally skilled to help an individual or institutional investor reach their financial goals. Helping them reach these goals can require skills in asset management, tax services, retirement planning, savings advice, and even advice on large purchases.

The goals of the client are one of the most important parts of determining which manager is best suited to help achieve those goals. While all managers have a base level of knowledge for all financial topics, many managers begin to specialize and receive more specific licenses for certain aspects of the business. For example, a manager with certifications in retirement and estate planning may be better suited to someone more advanced in their career and wants to begin detailing their retirement and after plans than someone that has just begun working and is more inclined to take more risks in their investment strategy. This relationship between client and wealth manager is one of the most important parts of this business as a whole. The building of this relationship begins with the discussion of the client’s financial health and goals. Without establishing that dialogue and goals, wealth managers are not well informed enough to properly serve their clients and help them achieve their goals.

One of the main reasons I find the wealth management industry is because of this opportunity to help people not only achieve their financial goals and give investment advice but also teach them about their finances and future. The business is completely client-centered, and the managers are simply there to serve those clients. They provide the necessary skills and information for a client create a plan and roadmap for their future. So many people outside of the financial industry find it not only difficult to manage their own money, but also to simply discuss it. There is a reluctance to ask for help or assistance in key financial decisions in life, and so many people don’t realize that advising those kinds of situations is something that a wealth manager can do. They are not exclusively there to provide investment opportunities and sell different investment vehicles, they are there to help in every aspect of your finances, and more than capable of providing well informed and objective advice. Most people think you need to be extraordinarily wealthy to work with someone like this, but any person can work with an advisor at any age or wealth status, although many large firms have minimum capital requirements. The key is to find a manager suited to your own situation that is equipped to help you achieve your goals.

While wealth managers are primarily associated with asset allocations and helping wealthy people make large investment decisions, I think it is important to illustrate there is so much more within the business than that. However, asset allocation and making investment recommendations for clients does make up a majority of what managers actually do, and it is important to recognize the importance of that responsibility as well. This primarily comes in the form of tailoring recommendations to a client’s level of risk acceptance and financial goals. Obviously, like in the example before, someone who is nearing the end of their career and focused on preserving their wealth for the rest of their life and after will receive much different recommendations for their investment strategy than someone at the beginning of their career with a desire for high returns and is not afraid of risk. One thing that is important to address when dealing with wealth managers and their recommendations is that they are just that, recommendations. Even though they are fully capable and educated on financial planning and advising, always keep in mind that it is your money and that all clients need to be sure each step they take is helping them move towards their financial goals.

At the end of the day, wealth managers are the people that are equipped to help an investor reach their financial goals the best they can. Their business not only involves knowledge and expertise, but also a great deal of trust and relationship building between them and clients. With so many people in the world that don’t fully understand how to manage their money properly and how to make smart financial decisions, wealth managers take on that responsibility for their clients, no matter their financial situation and help them begin making sense of their finances.

sources:

https://www.investopedia.com/articles/personal-finance/050815/what-do-financial-advisers-do.asp