Wealth in the U.S. is on the rise. Between 2019 and 2022, median U.S. family wealth increased by 8%—from $466,500 to $504,000, according to the Congressional Budget Office.
This news is music to the ears of financial advisors and wealth managers, professionals who are dedicated to helping people manage their money. The two job titles are often used interchangeably, and they share many commonalities and responsibilities—however, they prioritize serving two distinct classes of investors.
Here’s everything you need to know about the similarities and differences between financial advisors and wealth managers—and how to pick the best one for your financial situation.
Financial advisors work with clients to help set financial goals and develop a comprehensive plan to achieve them
Their responsibilities are equally related to financial analysis and relationship building, says Sarah Vita, chief talent officer at Equitable Advisors. “They don’t just do math and spreadsheets—it’s so much more,” she says.
The advisors can provide advice on everything from investment management and retirement saving to taxes and insurance to individuals of various net worths. Advisory firms require clients to have at least a few thousand dollars in investable assets before a relationship can be formed. For example, Edward Jones requires a $5,000 minimum investment to begin working with an advisor.
Financial advising is a promising career, Vita says, for three main reasons:
Impact: You can make a positive difference in others’ financial lives, like by helping them save for their children’s college fund or retirement.
Flexibility: You can often control your schedule, which is great for working women and moms in particular.
Income potential: Your income is a reflection of how hard you work, but you can easily earn six figures.
According to the U.S. Bureau of Labor Statistics, the median wage of personal finance advisors is just shy of $100,000, and the job outlook is over 4x the national average for all occupations.
“There’s never been a better opportunity to be in the profession of financial advising than in the next 10 years,” Vita says.
Think of a wealth manager as a financial advisor on steroids. A wealth manager conducts the responsibilities of a financial advisor but caters to high-net-worth individuals (HNWIs). Besides investment management and tax planning, wealth managers spend additional time on topics like:
Estate planning: Ensuring a direct transfer of assets following a death.
Charitable giving: Donating money can have tax implications, especially when giving away a significant amount.
Maintaining wealth: Managers ensure certain assets have the proper protections.
The clients of wealth managers tend to have at least $500,000 in investable assets, though the exact qualifications may differ. Most big-name brokers have wealth management divisions. Some examples include:
Each firm offers a different fee table, so before signing up, know what flat or percentage fees are charged—and stay on top if they change.
Because wealth management is a somewhat tight-knit community, relationship building is more important than ever, Vita says. The more credible you become, the more people with wealth will trust you and recommend your services to others.
Within the next decade, there is expected to be a shortage of more than 100,000 wealth managers in the U.S. due to rising wealth and rising demand for human advice, as well as talent recruitment issues. The median total pay for a wealth manager is about $260,000 annually, according to Glassdoor.
As noted, financial advisors and wealth managers have similar skills. They are both in the business of helping you reach your financial goals via investing, risk mitigating, tax planning, and estate planning.
If you have a complex financial situation—with potentially millions of dollars in assets—and need a more hands-on financial professional, seeking the services of a wealth manager is the right move. The same goes if you are growing older and want to ensure that substantial wealth is transferred appropriately.
If you’re not a HNWI and are more interested in obtaining investment management advice, then a financial advisor is all you need. This could come in the form of an experienced individual working at a brokerage firm or someone with a broader background, like a certified financial planner (CFP). Exploring the insights of a robo-advisor could also be an option.
Because demand for financial professionals is rising, what might be more valuable is the relationship you can build—not necessarily the job title. The best financial professionals, Vita adds, are those who lean into relationships, don’t consider themselves salespeople, and have a philosophy that the business is about helping people on their financial journey.
While new technology like generative AI is making the field of financial advising more accessible, some experts say the lack of domain expertise, security, and trustworthiness is a cause for concern. It remains best to work with a human, especially for those with complicated financial situations.
If you are in the market for a financial professional, there are luckily many options.
To start, it may be best to research potential broker firms and speak directly to a representative. On top of inquiring about minimum assets required and fees, become aware of their philosophy. Here are the leading lines on Goldman Sachs’s and J.P. Morgan’s mission statement pages, as two examples:
“At Goldman Sachs Private Wealth Management, we don’t just manage your wealth, we help maximize your impact. Your Private Wealth Advisor, backed by a team of specialists, learns your goals and values and curates solutions that align with them. With unmatched resources and guidance, we have a pulse on today and tomorrow.”
“The strength of a global powerhouse: For over 200 years, J.P. Morgan has been dedicated to empowering you with the information you need to grow your wealth. When you’re ready to invest in your future, the answer is J.P. Morgan Wealth Management.”
Asking friends or family members with similar financial situations what works best for them can also be a good idea. While ultimately, no one knows better about what’s best for your money than you, building a strong relationship with your finances—and a financial advisor or wealth management—will help your money grow.
