It is estimated that there are up to 300,000 personal advisors in the U.S., and nearly $30 trillion dollars of investable assets are overseen by some 80,000 of them. Searching for the right advisor can be daunting, but it is often essential to ensuring that your financial plan reflects your unique needs and goals.
The first step in hiring an advisor is making a list of what matters most to you in an advisor, whether it’s hourly fees or investment strategy. Here are some factors to consider.
But what makes a great wealth advisor, is there ability to take a client’s assets, income and current estate planning needs into account and help clients reach their financial goals. Experience plays a key role in a great wealth advisors’ success as they can not only anticipate market fluctuations, but also know how to plan long-term investments for their clients. In regards to financial knowledge, personal wealth advisors must be able to know and explain tax issues as well as basic asset allocation.
- What is a personal wealth advisor?
- What is a financial advisor?
- What’s the difference between a financial advisor and a wealth advisor?
- How much does a wealth advisor make a year?
- How do I become a wealth advisor?
- What should I expect from a wealth advisor?
- How do wealth advisors get paid?
- What are factors for choosing a wealth advisor?
- What are the 4 key principles of a wealth advisor?
- What are 7 things that make a great wealth advisor?
- Caveats, disclaimers & the new wealth
What is a personal wealth advisor?
A personal wealth advisor is a financial services professional who manages clients’ assets and invests money for them. They help clients set goals, track their progress and find solutions to problems they may be having in reaching those goals. Advisors also accept responsibility for providing case studies and investment advice tailored to meet the needs of these individuals, families or groups.
What is a financial advisor?
In the U.S., there are about 8,000 Financial Advisors who have been admitted to practice before the Securities and Exchange Commission. In order to be admitted to practice, a financial advisor must pass a test and meet certain requirements.
A good financial advisor should be knowledgeable of stocks, bonds, mutual funds, life insurance and other investment vehicles. An advisor is also required to disclose any potential conflicts of interest he or she might have with a client’s portfolio as well as how investments work in general.
What’s the difference between a financial advisor and a wealth advisor?
To begin, a financial advisor provides investment advice and/or financial planning services to clients. A wealth advisor is a subset of the financial advisory profession that concentrates on providing very high-net-worth individuals with comprehensive wealth management solutions. Simply put, wealth advisors provide more than just money management; they focus on maximizing an individual’s wealth in its entirety.
How much does a wealth advisor make a year?
Advisors usually charge a percentage of assets which they’re managing. This percentage is usually between 0.5% and 2%.
How do I become a wealth advisor?
There are several degrees one can obtain in order to become a personal wealth advisor : Certified Financial Planner (CFP®), Certified Financial Planners (CFP® Professional), Chartered Financial Consultant (ChFC®) and Personal Financial Specialist (PFS®). They are available in many places and through online instruction.
What should I expect from a wealth advisor?
A wealth advisor should offer guidance on how different investment options work, what might be appropriate given your financial goals and current stage in life. They should also be able to take into account tax considerations, along with any unique factors about you or your family that may have an impact on the way you manage your money.
How do wealth advisors get paid?
Many advisors take a fee-based approach to compensation, charging an hourly rate or a percentage of assets under management. While fee-only is often the simpler, more direct method of getting paid, many clients prefer low rates and flat fees for performance based services. When you choose a fee structure it is important that a potential advisor make it clear how he or she gets paid and what those fees look like.
Conversely, if your primary concern is minimizing costs you might opt for a fee-only model, where the advisor offers advice and then develops and manages investment portfolios that may be charged at the end of each year. The challenge with this approach is that many financial advisors who only charge a fee lack the proper training to create and manage an investment portfolio. Regardless of your preferred structure, make sure that a potential advisor is completely clear on how they get paid.
What are factors for choosing a wealth advisor?
One of the most important factors in selecting any service provider is trustworthiness and transparency. Good financial advisors will be up-front with you about their education, certifications and professional affiliations. It is also important to note whether an advisor works with other providers or has their own in-house team of support staff.
It’s great to know that your advisor has attended degree programs at top universities like Harvard and Stanford, but it is even better if they have had practical experience working with clients for at least three years. Look for an advisor who is credentialed with one or more professional associations, like the CFP board of Standards, and has attended regular financial planning seminars to maintain their knowledge.
What are the 4 key principles of a wealth advisor?
A great wealth advisor should be committed to four key principles:
1) Trust – A great advisor builds long-term relationships with clients and puts their best interests first all of the time.
2) Integrity – A great advisor demonstrates sound, moral character and honesty in all of their actions.
3) Knowledge – A great advisor constantly strives to build and maintain a network of industry contacts and knowledge. They make sure they understand how the financial world works and demonstrate an advanced knowledge about investments, tax laws and other relevant topics.
4) Independence – A great advisor always puts clients’ interests first, rather than their own. They are not tied to any specific firm or product, and they do not take commissions on the products they recommend.
Great wealth advisors like these are truly invaluable sources of professional guidance for high-net-worth individuals looking to invest their money wisely and ensure that it will be there for them and their loved ones long into the future.
You may also want to read What are ESG Certifications?
What are 7 things that make a great wealth advisor?
The best wealth advisors:
- Are knowledgeable about stocks, bonds, mutual funds, ETF’s and other investment vehicles
- Disclose any potential conflicts of interest he or she might have with a client’s portfolio.
- Anticipate market fluctuations and know how to plan long term investments for their clients.
- Create personalized plans that meet the needs of their clients.
- are experienced at managing assets and are able to track their progress towards meeting financial goals.
- Are aware of tax issues as well as basic asset allocation.
- Charge a percentage of assets they’re managing, usually between 0.5% and 2%.
Caveats, disclaimers & the new wealth
At ESG | The Report, we believe that we can help make the world a more sustainable place through the power of education. We have covered many topics in this article and want to be clear that any reference to, or mention of investment management services from the dow jones news corp or managed spend firms in the context of this article is purely for informational purposes and not to be misconstrued as investment or any other legal advice or an endorsement of any particular company or service. Neither ESG | The Report, it’s contributors or their respective companies or any of its members gives any warranty with respect to the information herein, and shall have no responsibility for any decisions made, or action taken or not taken which relates to matters covered by ESG | The Report. Thank you for reading, and we hope that you found this article useful in your quest to understand ESG and sustainable business practices. We look forward to living in a sustainable world.
Research & Curation
Dean Emerick is a curator on sustainability issues with ESG The Report, an online resource for professionals focusing on ESG principles. Their primary goal is to provide resources to help middle market companies, SMEs and SMBs transition to a more sustainable future.