It’s important to manage your money with long-term objectives in mind, but doing so alone can be challenging. However, there are two main services that a financial professional can provide for you: wealth management vs asset management. Although both offers share many characteristics, their primary objectives and aims are not the same. A complete service, wealth management may handle all aspects of your finances, including investments, retirement, college savings, and estate planning. However, asset management is more closely centered around your portfolio of investments. Use Smart Asset’s free matching tool to discover a financial advisor in your region if you need assistance.
What Is Asset Management?
The management of your assets is precisely what asset management entails. All of your financial possessions are considered assets, although asset management typically concentrates on your investments. Investing in stocks, bonds, mutual funds, exchange-traded funds (ETFs), and other assets to increase your wealth and plan for the future falls under this category.
Your financial condition will determine which investments are most appropriate for you, according to an asset manager. This implies that they will assist you in making decisions about how to allocate your investable assets among various asset classes, or in other aspects of asset allocation. This basically means figuring out how much of your portfolio should be made up of fixed-income securities like bonds and how much should be made up of growth goods like equities.
Typically, asset managers get paid as a percentage of the assets they oversee. Rates are frequently progressive, meaning that they are smaller the more money an investor has an asset manager supervise.
What Is Wealth Management?
Wealth management has a far wider perspective than asset management, which is primarily focused on investments. Examining a person’s or family’s entire financial status and taking action to protect and grow their money over time is known as wealth management.
This might include a variety of services and take many different forms. Among the services a wealth manager could provide are:
- Tax planning
- Education planning
- Legacy planning
- Estate planning
- Insurance
- Charitable giving
- Retirement planning
Wealth management services takes a more comprehensive approach to a client’s entire financial condition, whereas asset management concentrates on increasing an investor’s capital. It then takes action to guarantee the long-term safety of their capital.
Although some are paid a flat or hourly fee, wealth managers are also frequently compensated as a proportion of the assets they manage. However, each advisor has their own charges and price schedule.
Asset Management vs Wealth Management: Which Is Right for You?
Your aims will ultimately determine whether you require wealth management or asset management services. If your needs are limited to assistance with investing, an asset manager is probably the best option. An asset manager will assist you in selecting the optimal investments for your portfolio, but they will mostly hand off the remaining aspects of your finances to you.
Conversely, a wealth manager is the person you should hire if you want assistance setting up and managing your finances in a more comprehensive manner. Wealth managers may assist with a wide range of issues, including estate and education planning.
However, there’s a strong possibility you’ll require both wealth management and asset management, and many financial advisor businesses do both. For both services, you might need to pay different costs, nevertheless. In certain firms, custodial and other expenses are included in a wrap price that includes both services.
How to Find Wealth Management and Asset Management Services
Finding a wealth manager or asset manager can be done in a variety of ways. The tried-and-true method is to ask a family member or acquaintance who uses a professional for assistance. There are benefits to this kind of advice, too, since it comes from a reliable source. But just because an advisor works well for one individual doesn’t guarantee it will work well for you as well.
For example, many people inherit an advisor from their parents, but this manager may not be the most appropriate one for their circumstances. Naturally, your parents are in a totally different stage of life than you are. Seek out a financial advisor that focuses on helping others in similar financial conditions to your own.
Additionally, SmartAsset offers a complimentary service for matching you with up to three local financial experts.
Conclusion
The choice between wealth management and asset management ultimately boils down to your expectations from a working relationship with a financial advisor. Selecting and overseeing investments is the focus of asset management. Wealth management takes a broader view of an individual’s entire financial situation and holdings. Certain experts perform both tasks, enabling you to select just one candidate for the position. All of the professionals that you will probably hire can be broadly classified as “financial advisors.”
