Wealth Management: What it Is, What it Costs, When to Use

Real estate, stocks, bonds, and other assets can grow wealth for current needs. These assets can also pass that wealth to future generations. However, making the right decisions to reach and maintain financial goals can be difficult and complex. 

In such a situation, retaining a wealth manager can help you decide the right investments to buy, hold, and sell to try to build the value of your holdings. 

Wealth Management: A Definition

Wealth management involves assessing financial planning and investment strategies tailored to client needs. A wealth manager, by extension, works with clients to develop long-term financial strategies aligned with their goals.

A wealth manager might provide the following services:

• Investment management
• Tax planning
• Asset protection
• Retirement planning
• Estate planning

• Charitable giving

Some wealth managers can be licensed attorneys, certified public accountants (CPAs), or CERTIFIED FINANCIAL PLANNERS™. In some cases, they can be required to obtain Series 7 and Series 63, 65, or 66 credentials from the Financial Industry Regulatory Authority (FINRA). 

Net-Worth and the Wealth Manager Decision

Deciding to engage a dedicated wealth manager can depend on your overall net worth, levels of investable assets, and the company’s requirements. Firms may define wealth tiers differently, but a general breakdown includes:

• Entry-Level Net Worth: $250,000 to $1 million 
• High-Net-Worth: $1 million to $5 million 
• Ultra-High-Net-Worth: $5 million and above

Some independent wealth managers serve entry-level net-worth clients. Others–typically larger firms–prefer to work with high-net-worth or ultra-high-net-worth individuals or families.

Fee Structures

How much you pay a wealth manager to help you can vary based on the service level you need. Common fee structures include:

• Assets Under Management (AUM) percentage: Many wealth managers charge a percentage of your AUM. That percentage can range from 0.5% to 1.5% annually.
• Flat fee: Some wealth management companies prefer to charge an annual fee. Depending on the level of service, the cost can be from $10,000 to $50,000 or higher.
• Retainer fee: A wealth manager who assists with a specific issue or need will most likely charge an hourly or retainer fee. The amount typically ranges from $200 to $500 an hour.

When Retaining is Worthwhile

If you want to get the most out of your investment real estate, hiring a wealth manager could be helpful under the following circumstances:

• Structuring investments to potentially minimize tax risks
• Optimizing asset protection strategies
• Including non-real estate assets in your investment portfolio
• Establishing wealth transfer and estate planning solutions

Before looking for a wealth manager, it’s a good idea to know your financial goals, determine your required level of service, and understand the fee structure involved. Be sure the benefits of hiring a wealth manager fit with your investment strategy and objectives.

If you want to bridge the gap between investment property ownership and wealth management, contact the team at Realized 1031. Realized’s staff is ready and willing to discuss retirement income needs, risk management, and wealth preservation across generations.

For more information and a free portfolio analysis, visit realized1031.com.

The tax and estate planning information offered by the advisor is general in nature. It is provided for informational purposes only and should not be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.