Services can be confusing. When shopping among asset management vs. wealth management, you may wonder how the offerings differ. In some cases, there’s little difference. However, some wealth managers would argue that they offer a broader range of services with the big picture in mind.
Asset management focuses primarily on managing funds. For example, if you want somebody to handle investing (including opening accounts, building a portfolio, buying and selling, rebalancing, and so on), an asset manager might be a decent choice.
Asset management compensation is typically based on the assets under management (AUM). For example, the traditional fee has been 1% per year for financial advisors, although some advisors charge other types of fees, such as flat fees for service.Note that sometimes asset managers offer additional services, including financial planning.
Wealth managers might take a big-picture view of your finances. While asset management might be one of their services, wealth management could include other aspects. For instance, you might get guidance on tax and estate planning, insurance protection, education funding, and more.
Ultimately, the services available from asset managers vs. wealth managers come down to the individual firm you’re working with. So, it’s important to ask questions and figure out who is the best fit. Look for those who act as a fiduciary, and discuss fees along with what you can really expect out of the relationship.
CHAPTERS: 0:00 No Strict Definition 0:43 Asset Management Services 1:20 Additional Services From Asset Managers 1:39 Compensation for Asset Management (AUM to Flat-Fee) 2:10 Wealth Management Services 2:41 Compensation for Wealth Managers 3:02 Which Is Best? Asset Management vs. Wealth Management
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Justin Pritchard, CFP® is a fee-only fiduciary advisor who can work with clients in Colorado and most other states.
IMPORTANT: Always research advisors carefully, including looking into their background and asking questions. Conduct a search through BrokerCheck and use other resources for due diligence.
It's impossible to cover every detail and topic in a video like this. The only thing that's certain is that you need more information than this. Always consult with a CPA before making decisions or filing a tax return. This is general information and entertainment, and is not created with any knowledge of your circumstances. As a result, you need to speak with your own tax, legal, and financial professional who is familiar with your details. This video is not a substitute for individualized, personal advice. Please verify with your plan administrator when employer plans are involved. This information may have errors or omissions, may be outdated, or may not be applicable to your situation. Investments are not bank guaranteed and may lose money. Opinions expressed are as of the date of the recording and are subject to change. The Comments section contains opinions that are not the opinions of Approach Financial, Inc., and you should view all comments with skepticism. Approach Financial, Inc. is registered as an investment adviser in the state of Colorado and is licensed to do business in any state where registered or otherwise exempt from registration.
