Financial adviser vs wealth manager: what are the key differences?

What is a financial adviser?

A financial adviser can offer a broad range of financial services. Typically, they provide advice on things, including retirement planning, tax management, and investment strategies.

Sometimes, a financial adviser may only specialise in one or two of these areas. You can find a financial adviser at a financial services firm, or working independently in a freelance or contractor capacity. 

What is a wealth manager?

A wealth manager is a type of financial adviser who specialises in working with individuals with a high net worth.

They tend to work more closely with their clients and offer comprehensive, ongoing financial advice on investing, philanthropy, tax services, and estate planning.

You can find a wealth manager through a financial firm that caters to clients with high net worth. Alternatively, you can opt for a freelance or self-employed wealth manager.

Financial adviser vs wealth manager: what is the difference?

Even though financial advisers and wealth managers have overlapping areas of expertise, there are still a few key differences to consider. 

The main difference between financial advisers and wealth managers is the type of client they typically work with.

Financial advisers take on clients from a broad spectrum of income levels and financial needs, while wealth managers work exclusively with clients with a high net worth.

So, if you are wondering if you need a financial adviser or wealth manager, start by assessing what kind of client demographic you fit into. 

Both financial advisers and wealth managers are regulated roles that require a degree in financial services.

However, financial advisers must register with the Financial Conduct Authority (FCA), while wealth managers are not necessarily regulated by one particular entity. 

Qualifications

To become a financial adviser or a wealth manager, you must obtain qualifications in financial services or economics. You can also benefit from qualifications in corporate communication, data analytics, and negotiation. 

There are not many differences in qualifications between the two professions. However, experience in each field is essential for pursuing them. 

Service costs

Generally speaking, a financial adviser charges less than a wealth manager. You can find a financial adviser who, according to MoneyHelper, charges between £75 and £350 per hour.

Wealth managers tend to charge based on their client’s portfolio value, so it can be difficult to ascertain service costs unless you speak with a consultant directly. 

Fee structures

Both financial advisers and wealth managers may adopt different fee structures depending on their service offerings and clientele.

However, most financial advisers charge an hourly rate, fixed fee or a percentage of assets, while the average wealth manager charges a percentage-based fee for their services.

According to Accountant Costs, this fee is typically between 1% and 1.5% of your asset portfolio. 

Client relationship

There is a big difference in how financial advisers and wealth managers handle client relationships.

A financial adviser’s relationship with a client can be shorter term than that of a wealth manager, but they can work with clients for a long period of time.

Wealth managers tend to work more closely with clients and on a long-term basis. as they handle larger sums of money, often bound to family estates. 

Do I need a financial adviser or wealth manager for my needs?

The type of financial guidance you need depends on your financial circumstances and budget.

Both financial advisers and wealth managers can offer long or short-term services across various financial areas.

However, one is bound to meet your needs more than the other, so let’s re-examine the fundamental services of each:

Financial adviser

You are more likely to need a financial adviser if you are seeking practical and affordable financial guidance. A financial adviser can give you one-off sessions or help you with an ongoing issue, from pension and tax planning to first-time investments and budgeting. 

Wealth manager

If you are a high-net-worth individual seeking help managing your wealth strategically, you will likely need a wealth manager who will work closely with you over a long time to manage your resources and investments and offer guidance on asset management. 

Get expert financial advice

A financial adviser helps many clients manage their finances effectively, from tax planning to retirement. A wealth manager focuses on providing high-net-worth individuals with long-term advice on managing their wealth. 

Unbiased can help you quickly match with a financial adviser who can offer tailored advice so you can reach your future goals.