Wealth Management | Definition, How It Works, Services, & Alternatives

True Tamplin, BSc, CEPF®

Written by True Tamplin, BSc, CEPF®

Reviewed by Subject Matter Experts

Updated on February 27, 2024

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What Is Wealth Management?

Wealth management is a high-end investment advisory service that provides holistic financial planning and management services to wealthy clients.

Wealth managers use a collaborative approach to learn more about the unique circumstances of their customers and then create a personalized plan using a range of financial products and services.

Asset allocation will involve investments, tax preparation, estate planning, and other financial considerations.

The purpose of wealth management is to help clients achieve financial stability by increasing and safeguarding their assets.

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Taylor Kovar, CFP®

CEO & Founder

(936) 899 - 5629


I'm Taylor Kovar, a Certified Financial Planner (CFP), specializing in helping business owners with strategic financial planning.

In my early days of financial consulting, I encountered a client with a penchant for tech stocks, which dominated his portfolio. Despite his enthusiasm, the volatility worried him. Drawing from market analysis and risk management principles, I guided him towards a more balanced approach, incorporating bonds and international equities. This diversification not only cushioned his portfolio against tech market swings but also tapped into emerging markets' growth, boosting his overall returns. Wealth management doesn't have to be complicated or overwhelming.

Contact me at (936) 899 - 5629 or taylor@kovarwealth.com to discuss how we can achieve your financial objectives.


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How Does Wealth Management Work?

Wealth management is assessing and making decisions about your wealth to meet your financial objectives. It would be best to manage your wealth (measured by your assets and cash) to grow it or keep it from diminishing in value.

A wealth manager can do this for you by gathering information about your circumstances and tailoring a personalized strategy that utilizes a variety of financial products and services.

The wealth manager then arranges for the services required to handle the funds belonging to their client.

Services available through wealth management offer a one-stop shop for all sorts of financial advice. Wealth management firms offer a broad and sophisticated range of financial services to their wealthy clients.

A financial advisor often charges a fee that is equivalent to 1% of the assets they are managing. However, the cost decreases as your investment increases.

Wealth Management Services

Listed below are some of the most prominent services offered by wealth management firms:

Investment Management

Investment management includes more than just purchasing and selling financial assets and other investments.

Wealth managers will collaborate with clients to design a customized investment plan based on their objectives and risk tolerance.

Creating a short- or long-term strategy for the acquisition and sale of portfolio holdings is a component of management.

It may cover tax obligations, banking services, and budgeting responsibilities.

Financial Planning

Your financial goals are identified, arranged, and prioritized in a financial plan, which also lays out the activities you must take to accomplish them.

It will indicate whether you need to make changes to your spending or if you are on pace to accomplish your financial objectives.

These strategies could center on debt consolidation, opening a brokerage or bank account, starting a savings routine, or developing an investing strategy.

Financial plans are often flexible, making room for any unforeseen circumstances or potential life changes such as hospitalization, marriage, moving to a new home, a new job, and other life events.

Tax Advice

Tax planning can be overwhelming if you are managing your own business and maintaining various income sources as you need to abide by federal, state, and local tax regulations.

Wealth managers can offer recommendations to reduce the taxes that must be paid to the taxing authorities by a taxpaying entity with a complex financial situation.

Estate Planning

Making arrangements for the management and transfer of your estate after your death by using a Will, Trust, insurance policies, and/or other tools is known as estate planning.

It has numerous facets, but you must first thoroughly review the assets in your estate. Your estate comprises everything you own, including money, investments, savings, vehicles, jewels, homes, and others.

Avoiding an expensive probate process, preparing for incapacity, lowering taxes, and preserving assets are some common estate planning objectives.

Wealth Manager Qualifications

A wealth manager must have extensive knowledge of the stock market, tax regulations, and the banking industry. Many wealth managers have prior experience in accounting, financial planning, or investment management.

The following are some qualifications that should be assessed when considering a wealth manager:


The education required for this job can be obtained through a bachelor's or master's degree in business, finance, economics, management, or a related field from an accredited university.

If you decide to pursue a postgraduate degree, a Master of Trust and Wealth Management can teach you about risk management, insurance, compliance, and personal financial planning.

Additionally, there are MBA programs that allow for asset and wealth management specialties.


Numerous certifications are offered in the area of wealth management. To represent their depth of knowledge, many finance professionals choose to obtain several qualifications. Here are some of the top certifications obtained.

  • Certified Investment Management Analyst (CIMA) credential covers portfolio theory, behavioral finance, investment risk, and financial consulting.
  • Certified Private Asset Advisor (CPWA) tackles each stage of the wealth lifecycle, from wealth accumulation through distribution.

It includes strategies, philanthropy, wealth transfers, business succession, retirement, asset management, and other areas that pertain directly to high-income individuals and their families.

  • The Certified Financial Planners (CFPs) certificate is the best way to demonstrate that you have a general understanding of the principles of wealth management.

It tests your competency in some areas, including professional conduct, accounting regulations, financial education, tax planning, income projections, insurance planning, and investment planning.

The Financial Industry Regulatory Authority (FINRA) compiles the different professional designations and provides information on the respective issuing organization.


Both technical and soft skills are essential for wealth managers. Technical skills include competency in capital markets, the capacity to design a portfolio, skills in financial planning, and analytical skills.

  • Competency in capital markets provides wealth managers with knowledge about what brings buyers and sellers together to trade financial assets.
  • Capacity to design a portfolio will make wealth managers effective in diversifying assets, leading to increased returns and decreased risks.
  • Financial planning skill is the capacity to identify and apply the most suitable investment strategy. It includes using financial tools to come up with the best solutions.

On the other hand, communication, educational coaching skills, and skills in sales and developing a business are considered crucial too.

How to Choose a Wealth Manager

Identify Compatibility

Consider asking about the kind of clients they serve. Clients can determine from this whether the wealth management firm's area of expertise and client objectives align.

A millennial client might be paired with a baby boomer wealth manager. Given how different the two are in terms of outlook, personality, and ideals might pose some concerns. Finding the appropriate match and compatibility is important.

Verify Credentials

It is essential to gather information on the wealth manager who would work with the client. Information on their past professional experiences and their credentials should be thoroughly verified through the Securities and Exchange Commission (SEC).

Confirm Fees

It is crucial to consider if it is worth paying for the services offered by wealth managers. Clients must ensure that the performance of their investments justifies fees and costs.

A solid rule of thumb is to deal with a fee-only fiduciary, who is paid directly for their services and cannot earn commissions for suggesting certain items.

Wealth Management Strategies

Financial planning is the first step in wealth management, but it develops into more complex approaches and considerations after reaching a particular level of wealth.

For instance, both wealth management and financial planning offer guidance on the following:

Setting a budget or financial priorities, putting money aside for emergencies and unforeseen circumstances, and investing for a range of financial objectives, such as retirement.

It can also include utilizing insurance to safeguard your assets and family and planning your estate to ensure that your final wishes are fulfilled.

Once your net worth reaches a particular level, additional wealth management techniques can include advanced tax planning, sophisticated estate planning, advanced gifting techniques, and counseling on more complicated compensation schemes.

Risk management and protection are fundamental approaches in wealth management, such as rebalancing when circumstances change; a portfolio's assets are adjusted to retain the initial risk and reward ratio.

Diversification or investing in several assets to reduce the impact of losses in any one asset is often implemented as a strategy in wealth management.

Wealth Management Alternatives

An individual with a low net worth will not benefit from the services of a wealth manager. A financial or investment advisor is the more cost-effective option.

Financial advisors can cater a wide range of financial services to persons of more modest means.

A number of online financial advising options and applications have emerged, offering a vast array of services, including the most fundamental financial counseling to complex services.

Another alternative is the increasing popularity of Robo-advisors which are automated trading systems with an investment strategy. It is a lower-cost option for clients.

Wealth Management vs Asset Management

Asset management and wealth management are often used interchangeably, but they have differences.

Asset management involves managing money on behalf of individuals, institutions, sovereign wealth funds, and pension funds. Such can be managed in mutual funds, exchange-traded funds, single stocks, hedge funds, private equity, and the like.

Wealth management is asset management plus understanding an individual's entire balance sheet. Clients can get assistance with their mortgages, loan processing, and credit cards.

It entails providing clients with more thorough aid with all of their assets, liabilities, gifting, business ownership, legacy matters that could affect future generations, and related matters.

The most typical technique to assess how well its assets are performing is ROA (Return on Assets), computed by dividing the total assets by the net income reported for the given period.

Wealth management strategies aim to maintain stability over time through investment activity that incorporates risk management processes and other financial advice.

Wealth managers typically work on a fee basis, whereas asset managers are paid through commissions.

Asset management is designed to sell products rather than provide financial advice, which is why there is a difference in service fees.


The Bottom Line

Wealth management is a comprehensive approach to managing the finances of affluent individuals. It covers everything from investment selection and portfolio management to retirement planning and tax law.

Finance professionals, such as qualified wealth managers, will have the education, experience, and skills necessary to provide the best advice and guidance.

When choosing a wealth manager, it is important to consider factors such as alignment of values and investment style.

Wealth managers implement strategies that include creating a plan for investments and other accounts, incorporating a practical tax approach, and managing risk. One standard wealth management method is diversifying assets to reduce losses in any area.

There are a few alternatives to wealth management services, such as online financial planning services and Robo-advisors. Clients should understand which is appropriate for their objectives.

The bottom line is that wealth management can be an excellent way to get the finances of affluent individuals in order and ensure that their finances will grow and stay protected over generations.

Wealth Management FAQs


About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon, Nasdaq and Forbes.

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