The Role of Wealth Management You Need to Know

Wealth management is an excellent level of financial planning services. It includes professional investment management, comprehensive financial advice, estate planning, tax guidance, and legal assistance. Usually, private wealth managers work closely with other financial experts — such as estate planning specialists or accountants, to offer comprehensive financial advice.

Wealth management definition

Wealth management is a distinctive form of investment advisory services. A wealth advisor creates a customized investment strategy and plans for you to help manage your assets.

What does a wealth manager do?

Wealth managers target highly affluent clients. They are experts in financial questions related to the ultrawealthy, such as how to avoid estate tax. They often combine services among different experts, such as working with an accountant or a lawyer on your behalf. You can work with a wealth manager who works with other professionals on your behalf so that you do not have to spend time coordinating with each one separately.

The list of the services wealth managers usually provide:

  • Investment management. Wealth managers closely work with clients to create the right investment strategy considering clients’ risk tolerance and goals. They can manage your investment funds on your behalf as long as they are licensed as an investment advisor.
  • Financial planning. You can develop a financial plan that includes investing, saving, and budgeting goals. The plans can change as per your circumstances.
  • Estate planning. A financial manager can assist you in creating a plan for what will happen to your assets when you die. This may involve establishing a will or trust and naming beneficiaries.
  • Tax advice. You can get advice on how to structure your finances to minimize taxes. This service is crucial for you if you have several income streams.

How do wealth managers get paid?

This aspect may differ depending on where the wealth manager works. Wealth managers receive a salary and bonuses at a large firm. If you go to a private firm owned by an advisor, the advisory fee is typically around 1%. Ensure you always ask an advisor what their fee structure is.

The difference between a wealth manager and a financial advisor

The phrase “financial advisor” refers to a wide range of financial experts and is not subject to regulation or certification. A wealth manager is a financial counselor specializing in issues affecting extremely rich clients. A wealth manager’s investment minimum is typically far higher than that of a standard financial counselor.

Wealth managers typically provide more services than financial counselors. These services include estate planning, trust services, family legacy planning, charitable giving planning, and legal planning. Some financial managers even provide concierge health care as part of their services.

Alternatives to Wealth Management

A wealth manager is not required if you are comfortable managing your finances. There are alternative possibilities if you believe you could benefit from some assistance but cannot locate a manager you trust or choose not to involve another person in your finances.

A robo-advisor is one way to manage your money according to a predetermined investment strategy. Robo-advisors can be an excellent solution for folks who wish to handle their finances but lack the time or skills.

Investing in index funds is another option. Index funds are publicly available investments that track specific market indexes, such as the S&P 500. Index funds are a straightforward and low-cost approach to investing, often providing diversification throughout the stock market.

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