Asset Management vs. Wealth Management: A Guide - MagnifyMoney

Asset Management vs. Wealth Management: A Guide

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How do you decide if you need a financial advisor specializing in asset management or wealth management? After all, they sure do sound similar.

We’re here to help you stack up asset management vs. wealth management for a side-by-side comparison to see which best suits your needs.

With asset management, you hire someone to manage your investments. Wealth management includes asset management but also combines multiple aspects of your financial life — like estate planning, tax services and philanthropic giving into a consolidated and holistic plan.

What is asset management?

Asset management focuses on using investments to increase your wealth over time.

Asset managers — also called investment advisors, investment managers or portfolio managers — can help you identify the best investment products and asset allocation to reach your goals based on your risk tolerance. From there, they manage client investment portfolios to keep them on track with each client’s goals.

Some common asset management services include:

  • Risk assessment
  • Portfolio design
  • Investment rebalancing
  • Tax minimization strategies
  • Monitoring of investments and investment options
  • Asset distribution

Some asset managers may work as fiduciary financial advisors — an important distinction as only fiduciary advisors are legally required to put your interests first. Therefore, fiduciary advisors can’t recommend a product or service unless it is the best option for your unique circumstances, even if that product would be less beneficial to their bottom line.

What is wealth management?

Wealth management takes a more holistic view of your finances than asset management alone. Typically reserved for a firm’s more affluent clients, wealth management includes asset management but goes well beyond to service every aspect of your finances:

  • Retirement planning and goal setting
  • Estate and legacy planning
  • Philanthropic planning
  • Family office services
  • Tax planning
  • Access to exclusive investment offerings
  • Cash flow and debt management analysis
  • Insurance analysis (life, health, property, disability, long-term care)

Wealth managers are almost always fiduciary financial advisors.

Firms tend to set a high bar to qualify for wealth management services, with AUM minimums often found in the $1 million to $5 million range. For this reason, you might start with asset management and financial planning until you qualify for (and need) a more comprehensive wealth management approach.

Are asset management and wealth management the same?

While these two services sound interchangeable, they’re not. Asset managers typically focus on using investments to help their clients build their wealth. Wealth managers take a broader view of their wealthy clients’ assets so that each part of a client’s net worth works in harmony.

Asset management vs. wealth management: How to choose

Choosing between asset management and wealth management comes down to your assets, the type of service you want — focused or holistic — and which type of advisor can better meet your financial needs.

An asset manager might be a better fit if…

  • You’re just getting started. As you build your wealth, an asset manager will likely be a better fit to get your investment journey started on the right foot.
  • You only need investing guidance. If the day-to-day of managing your investment portfolio feels like too much, an asset manager will generally fit the bill.
  • You already have a team of financial professionals. An asset manager can work with your existing advisors to help optimize your investments for tax benefits and more.
  • You don’t meet the wealth management minimum yet. Asset management can help you optimize your savings and grow your wealth until you need a higher level of service.
A wealth manager might be a better fit if…

  • You need wide-ranging financial advice. Wealth management could be a better choice if you need the whole of your finances — like real estate, estate planning and business wealth — to work in harmony with your investments.
  • You have a complex financial situation. Wealth managers are typically well-trained to navigate more complex finances and work with other professionals to create a holistic strategy.
  • You’re a business owner. A wealth manager can help protect your business and personal wealth to help them grow together.
  • You have more than $750,000 to invest. Higher wealth opens you up to more opportunities and complexity, two areas where wealth managers shine.

How to find a wealth management advisor or asset manager

Weighing the benefits and capabilities of asset managers versus wealth managers is only the first step in your search for a trusted financial professional. Once you know what type of professional you’re looking for, it’s time to start wading through profiles until you find the right one.

To help you take the next step in your search, you can:

  • Research financial advisors and firms. Using Securities and Exchange Commission (SEC) data, you can learn about firms, advisors, fees and how they make money. Our visual guide to using the SEC’s Form ADV can walk you through it.
  • Learn more about your ideal advisor. Trusting someone with your financial goals is a big step. Check out our free guide to choosing a financial advisor to clarify the relationship you want.
  • Let MagnifyMoney match you. If you’re ready to take control of your finances, use the form below, and we’ll match you with a robo-advisor or financial advisor to start your investment journey. Easy, right?

Find a Financial Advisor near you

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The “Find a Financial Advisor” links contained in this article will direct you to webpages devoted to MagnifyMoney Advisor (“MMA”). After completing a brief questionnaire, you will be matched with certain financial advisers who participate in MMA’s referral program, which may or may not include the investment advisers discussed.