Financial Advisor vs. Wealth Manager

Stephen Mascitti is a lead planning excellence consultant at Northwestern Mutual.

So you’ve made the decision to find a professional to help with your financial planning. As you research who to work with, you’re likely to find that there are many types of financial professionals with a variety of titles.

On a very high level, both a financial advisor and a wealth manager can typically help you with holistic financial planning. They’ll discuss your goals with you—anything from sending a child to college, retiring comfortably, to leaving behind a legacy—and design a tailored plan that’ll grow your money and protect what you’ve saved to help you meet these goals.

Depending on your situation, you may benefit from working with either a financial advisor or wealth manager. Let’s take a look at the difference between the two.

What is a financial advisor?

A financial advisor is someone you’ll meet with to help you reach your financial goals. Your advisor will get to know you and what you’re hoping to achieve. They’ll also get a sense of what you’re already doing to get there. Together, you and your financial advisor will design a financial plan that includes a mix of different financial options—retirement accounts, investments, insurance and more—to put you on a path toward your goals.

What is a wealth manager?

A wealth manager, sometimes called a private wealth manager or a wealth management advisor, is similar to a financial advisor but can do a more in-depth analysis of your financial plan. They can also bring additional tools and specialization needed for higher net worth individuals. This could include advanced tax-efficiency planning, estate planning or sophisticated investing strategies.

Many financial advisors also provide services to high net-worth individuals. This is why it’s important to meet with an advisor to make sure that specific advisor is the right fit for you—rather than relying on their title. In a bit, we’ll share some industry credentials you may want to look for.

What does a wealth manager do?

Like a financial advisor, a wealth manager will help you design a plan that leverages financial tools to reach your goals. A wealth manager will help you look at what assets you have and what you’re hoping to achieve with them. But they’re able to take this support several steps further.

A wealth manager is attuned to special issues that arise when managing wealth for people with a higher net worth. They’re up to speed on strategies for reducing your tax impact and maximizing wealth. Estate planning may also play a larger role in a plan managed by a wealth manager. Often a wealth manager will also help you manage your assets—like your investment accounts and retirement accounts such as an IRA.

Generally, your wealth manager’s goal will be to help you maximize and protect your wealth.

How much money should you have to get a wealth manager?

While anyone can (and should) consider financial planning, generally once you have more than $250,000 in investable assets (outside of your retirement account), your financial situation is at a point when it likely makes sense to consider working with a wealth manager.

What's the difference between a financial advisor and a wealth manager?

Financial advisors and wealth managers serve a very similar role—they both aim to help you reach your financial goals. They’ll give advice on how to most efficiently grow and protect your money so that you’ll be able to achieve all you want to in life.

A wealth manager may also have additional insight to provide if you earn above a certain amount. The more money you have, the more complicated your finances can get. A wealth manager can give specialized guidance tailored to those with a higher net worth.

That being said—many financial advisors are also knowledgeable in this area. To ensure that you’re working with a professional who has the right training and expertise to meet your needs, it might make more sense to look at their industry credentials or designations instead of just looking at their job titles.

Common financial advisor and wealth manager credentials

Below is a list of some of the most common credentials that you might look for when evaluating a wealth manager or financial advisor. Each of these credentials has its own certification requirements (educational, training or experience) and specific ethical standards to follow upon certification.

CERTIFIED FINANCIAL PLANNER™ (CFP®)

The CFP® designation is one of the top certifications in the financial planning industry and is awarded to financial professionals who have demonstrated comprehensive financial planning knowledge. Those who receive a CFP® certification have met the CFP Board of Standards’ strict requirements, which includes a minimum level of on-the-job experience, completing educational requirements and passing a final board exam. Those with this designation are knowledgeable on a range of planning topics including insurance, investing, tax considerations, retirement, business owner needs, estate planning and more.

Chartered Financial Consultant® (ChFC®)

The ChFC® designation is also representative of someone who has comprehensive and extensive financial planning knowledge. It is granted to financial professionals who have completed requirements set by the American College of Financial Services, including extensive coursework on insurance, investments, tax planning, retirement planning, planning for business owners, estate planning and more. The CFP® and ChFC® certifications have many of the same educational requirements, but instead of a final board exam, ChFC® candidates must complete a comprehensive case study analysis.

Chartered Life Underwriter® (CLU®)

The CLU® designation is granted to financial professionals who’ve completed a financial planning program offered by the American College of Financial Services. Those who hold this certification typically specialize in life insurance and estate planning, and they must complete coursework in insurance planning, life insurance law, estate planning and planning for business owners, among other topics.

Retirement Income Certified Professional® (RICP®)

In addition to general financial planning, professionals with the RICP® designation specialize in retirement income planning. They typically work with those in, near or preparing to enter retirement and specialize in building holistic retirement plans. Those with RICP® designations have an extensive knowledge of how to build retirement income using creative distribution strategies and other income sources like annuities or Social Security. This designation is often held in addition to a CFP® certification or a ChFC® or CLU® designation and is also granted by the American College of Financial Services.

Choosing the right advisor for your needs

Your relationship with your advisor and their team will ideally last the rest of your life, so it’s important you choose someone you feel like you can trust with your money.

Ultimately, choosing an advisor doesn’t need to be complicated or stressful. Before committing to working together, you’ll want to meet with potential advisors and ask questions to make sure they’re the right fit. Get to know their investment philosophies and areas of specialty. Be clear about your financial goals and what you’re looking for support with.

The advisor you ultimately choose to work with should be someone you enjoy working with who can provide the support you need to achieve all your financial goals.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements. Financial Advisors and Wealth Management Advisors do not render tax advice. Consult with a tax professional for tax advice that is specific to your situation.