Should You Choose A Wealth Manager Or An Investment Manager?

As your financial situation changes and hopefully, over time, your wealth grows, your financial needs change. Protecting your wealth and getting the best return on your investments becomes more important and potentially, more complicated.

Deciding whether to appoint the services of a finance professional will depend on your financial situation and what would be appropriate for you. A good place to start is by determining what those professionals can do for you.

What does a wealth manager do?

Wealth management encompasses financial and investment advice along with accounting, tax services, retirement and estate planning under one umbrella.  Clients work with a single wealth manager who coordinates information from a range of financial experts. Wealth management encompasses all aspects of an individual’s financial circumstances. The idea being that a single manager coordinates all the services needed to manage a client’s money and plan for their current and future needs.

Wealth managers develop a plan to maintain and grow a client’s wealth based on individual financial situation, goals and the level of risk aversion. Managers regularly meet with their clients to update goals and review financial portfolios. Their goal is to remain in a client’s service throughout their lifetime.

Investor studying the performance of his investments

What does an investment manager do?

Investment Managers will oversee various financial securities and assets on behalf of an investor with the aim of maximising returns for their client. Investment managers invest their clients’ money. From fast-growing, risky stocks to slow-growing but safe bonds, they choose a balanced selection of investments with the aim of achieving the return the client requires at a level of risk that they’re comfortable with.

An investment manager will make investments in portfolios of securities on behalf of their clients. This is based on the objectives and parameters set by the client.  They develop an investment portfolio for their clients and create new investment opportunities that wouldn’t otherwise be available.

How do they differ?

The first point of differentiation is that while investment managers may offer a variety of products, each product is principally investment-based. Wealth managers, however, offer a choice of products based on solutions. A client’s long-term financial goals and needs determine the choice of products. Investment opportunities may well be available, but they do not constitute the overall professional services provided.

Unlike investment management, wealth management tends to favour a financial plan over products. A wealth manager has an informed view of a client’s financial picture and this information will inform which products come into play.  A wealth manager places products and services in the context of a client’s overall financial plan. The focus is on how products and services can address a client’s complete financial position over the course of a long and mutually beneficial relationship.

A business man using a laptop

Wealth managers, like investment managers, use their expertise to access the best funds. They place clients’ money in high-performing assets at the right time. They both manage client portfolios to ensure diversification at the appropriate level of risk. Unlike investment managers however, wealth managers provide more comprehensive financial services and advice. From tax guidance to advice on ISA and pension allowances, wealth managers offer a more holistic service.

Investment managers will generally charge fees which are based on a percentage of the client’s assets under their management.  They charge their clients a management fee and take a percentage of the profits from the investments. The more profit they make for their clients, the more money investment managers make for themselves.

Similarly, most wealth managers levy a fee based on a percentage of the client’s assets under their management. This means that costs may increase as the value of the assets under management grows and particularly so, if there is no tiered fee structure in place to offset the increase in costs. It’s also worth being aware that transaction fees may be levied.

If you’re looking to secure the services of an investment manager, ensure your chosen provider understands what you want to achieve from your portfolio. Similarly, if wealth management would better suit your circumstances, ensure you receive expert and impartial advice that can help you to meet your goals and plan for the future.

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