Have you always been good at managing your money? You always know how to identify risky investments and build your current finances. Did you know that there is a career field out there for people like you?
This job title is called a wealth management advisor. Read further to find out what a wealth management advisor can do. Your next best career could be waiting for you right around the corner.
What is Wealth management?
Wealth management means managing the assets of high earners. It involves using a wide range of services and products to grow and protect these assets over time. The number one goal in wealth management is to increase a client’s wealth.
Individuals with at least $1 million in liquid financial assets are high net worth individuals (HNWI.) Individuals with assets between $100,000 and $1 million are a sub-HNWI or affluent investor. Investors with more than $30 million in assets are Ultra high net worth investors.
Data from the Federal Reserve Survey of Consumer Finances indicates that over 11 million households in the US are worth over $1 million. In 2016, there were approximately 4 million households in this category.
What is a Wealth Management Advisor?
A wealth management advisor studies a client’s monetary needs. They build a portfolio that reaches their client’s financial goals. They develop these portfolios based on the client’s goals, financial condition, and risk comfort.
U.S. banking institutions like JP Morgan and Goldman Sachs offer private wealth management business units. Wealth management advisors can also work out of smaller-scale offices as well. Sometimes they will have their own solo practice.
Sometimes clients receive services from a single wealth manager. Some will have access to a team of wealth management professionals.
Many wealth management professionals charge a fee based on the value of the assets they manage. Commission-based payments allow advisors to collect a commission for every financial product (i.e., annuities, securities) their clients buy. Fee-based professionals receive no compensation for product sales.
Wealth management advisor salaries can range between $75.000 and $115,000. These professionals may also earn bonuses for their services as well.
Sometimes it’s easy to confuse the term “wealth management advisors” with “financial planners.” Financial planners help with lifestyle planning tasks like refinancing your house. Wealth management advisors provide direction for larger financial concerns.
Larger concerns include tax and estate planning, investments, real estate, and risk management. Here is a deeper look at what wealth management means to each of these larger financial areas:
Investment management includes controlling different securities and assets like real estate or bonds. Wealth management advisors can analyze and recommend stock purchases. They can also advise on investment contracts with private or institutional investors.
Risk management refers to identifying and mitigating the uncertainty of an investment decision. Wealth management advisors know how to analyze and measure an investment’s potential loss in value. With this information in hand, the advisor can take action (or inaction) based on their client’s level of risk tolerance.
Tax and Estate Planning
Tax planning means using tax exemptions and deductions to cut one’s tax liability. Wealth management advisors know the methods for lowering their client’s tax liabilities. These methods are legal and not considered tax avoidance or tax evasion
Estate planning means pre-arranging how to manage someone’s assets after they die. Wealth management advisors can help distribute assets to beneficiaries and complete estate taxes. Wealth management professionals will work with probate attorneys to execute these tasks.
Real estate investing means buying and managing rental property. Investors will buy land or buildings and rent them out to tenants. This form of investing is desirable because you can take possession of the property by paying a fraction of the total cost upfront.
How do You Become a Wealth Management Advisor?
Wealth management advisors must earn a bachelor’s degree to begin their careers. Most wealth management professionals will also earn a master’s degree in a related discipline.
Wealth management advisors who provide investment advice to buy or sell stocks and bonds must have a license to do so. These wealth management professionals with smaller companies must register with state regulators. Advisors with larger firms can register with the US Securities and Exchange Commission.
Wealth management advisors will also do supervised internships where they learn more about job expectations. They learn how to develop investment portfolios and build a client network. These internships will last between one and two years.
Wealth management professionals may also earn a Certified Private Wealth Advisor (CPWA) certification. CPWA certifies that the advisor is proficient on the wealth life cycle to accumulate, preserve and distribute funds. They can also create a strategy to reduce tax liabilities and transfer wealth.
Does a career as a wealth management advisor sound good to you? If you have your bachelor’s degree, check with your local bank to see if they offer wealth management internships. Make a long term plan to earn your CPWA certification to make yourself more marketable.
Or are you one of those lucky HNWI earners looking for a wealth management advisor? You can start by checking the Securities and Exchange Commission’s investment advisor search page. You’ll be able to find the advisors you need to help secure your financial future.
For more money management advice, don’t forget to check our website. We’re here to help you preserve that nest egg you’ve worked so hard to earn.