Financial Advisor vs. Wealth Advisor: What’s the Difference? 

Few topics rival the importance of saving for retirement and wealth management. Unfortunately, few topics also rival its complexity. With shifting rules, strict regulations, and serious consequences for mistakes, effectively managing your finances can quickly become overwhelming. Luckily, there are qualified professionals with the knowledge to help you navigate these intricacies. But these professionals often refer to themselves using similar-sounding titles like “financial advisor” or “wealth advisor.”

To help you understand the difference between a financial advisor vs. wealth advisor in our opinion, let’s take a brief look at the basics before diving into a more in-depth breakdown of the differences between these two distinct financial professionals.  

• Financial Advisor: A more general term for financial professionals that help with budgeting, retirement planning, investment strategies, and other aspects of maintaining and achieving a healthy financial profile. 

• Wealth Advisor: Specialized financial professionals focused on providing wealth management, estate planning, tax strategies, and high-net-worth financial planning for individuals and families typically with over $500K in assets. 

As you can see, they both share similar descriptions, but the two are not the same. Although overlaps in their services exist, the circumstances behind them differ tremendously. Wealth advisors excel with high-net-worth clients while financial advisors provide financial services to a much wider range of clients.  Now that we have a baseline definition to orient ourselves to their differences, we can examine the specifics to better understand their use cases. In this article, we will cover the following topics to compare financial advisor vs. wealth advisor:

• Services 
• Situations 
• Qualifications 
• Costs 

Services Provided by Financial Advisors Compared to Wealth Advisors 

Financial services vary broadly. Just like you wouldn’t take your boat to a car mechanic, you typically wouldn’t seek out someone who claims to be a financial advisor to help plan a trust or estate plan. Similarly, a wealth advisor will most likely turn away clients who are struggling to make ends meet and looking for a get-rich-quick scheme. Finding the right professional to provide the services that you need depends largely on your financial goals and the extent to which you require assistance. 

Financial Advisor Services 

A financial advisor provides basic financial planning services. They know how to assess your current spending habits and build a plan to help you reach your goals. Hiring a financial advisor is typically the first step that people take toward becoming financially stable and planning for retirement. The services they provide can generally help everyone, regardless of where you sit on the financial spectrum. Some of the main services provided by a financial advisor include: 

• Debt consolidation 
• Budgeting 

• Investment strategies 
• Retirement planning 

Wealth Advisor Services 

A wealth advisor typically provides financial services catered to high-net-worth individuals and families. Clients with more than $500,000 in assets require a more meticulous management style, and a wealth advisor is equipped to handle these demands. Wealth advisors concern themselves with protecting and growing existing wealth. Individuals and families looking for a wealth advisor can expect to receive the following services: 

• Estate & trust planning 
• Tax planning 
• Portfolio management 
• Alternative investment opportunities such as real estate 

Situations for Consultation 

No two financial situations are the same, and finding the correct professional to help achieve your goals is a crucial consideration. Someone seeking the services of a wealth advisor could partner with a financial advisor, but they may not receive the same expertise and quality of service. Making the best choice for you comes down to examining your situation and outlining your goals. 

When to Consult a Financial Advisor 

Individuals and families looking to begin their journey to financial independence should consult with a financial advisor. Their knowledge is broad and can be applied to a variety of situations. A quality financial advisor will take the time to discuss your goals and outline a strategy to achieve them. Consulting a financial advisor is an excellent first step for young professionals and established families who are looking to: 

• Send a child to college 
• Recover from outstanding debt 
• Build financial literacy 

• Save for a large purchase 

When to Consult a Wealth Advisor 

Wealth advisors offer their services to high-net-worth individuals and families who are looking to be proactive in preserving and growing their existing wealth. A wealth advisor is also able to assist in the life-changing instance of a financial windfall, such as from an inheritance, the sale of real estate, or unexpected investment performance. They often deal with wealth management in cases where their clients either do not feel comfortable managing their money or do not have the time or desire to do so themselves. Consider consulting a wealth advisor if: 

• You received a large lump sum payout 
• You have accumulated a level of wealth that you are uncomfortable managing 
• You have over $500,000 in assets 
• You do not have the time or interest to manage your wealth properly 

Financial Advisor vs Wealth Advisor: Qualifications 

While there are no official qualifications to becoming a financial advisor or a wealth advisor, there are definitely qualifications for choosing a financial advisor or wealth advisor. You are trusting them with your financial future, so they must be held to high standards. Additionally, if your advisor offers investment services, it is important to verify that they are licensed to do so. 

Below is a list of qualifications that signal the quality of a financial professional. While it will be almost impossible to find one individual who meets every qualification, a family-office style wealth management firm provides access to a qualified team that checks the following boxes: 

• Financial degree from an accredited university 
• CERTIFIED FINANCIAL PLANNER™ 
• Access to a Certified Public Accountant (CPA)  
• Access to an Accredited Estate Planner (AEP) 

Costs and Fee Structure 

Being financially savvy also means understanding costs, and an overview of the differences between financial advisors and wealth advisors would not be complete without a section detailing common cost and fee structures. In general, you can expect financial advisors to be more affordable when compared to the more-exclusive wealth advisors. However, regardless of the financial professional that you partner with, it is important to be cautious of commission-based fee structures. Commission-based advisors will often advertise their services as “free.” If an advisor earns a commission, make sure to perform your due diligence when assessing their intentions because they might not be in your best interests. 

How Much Does a Financial Advisor Cost? 

Financial advisors typically enlist three different fee structures: Flat fee, hourly fee, or a percentage of assets under management (AUM). Every financial advisor will have a unique price structure, but on average, you can expect to pay at least $5,000 per year for a financial advisor. For individuals who are still taking their first steps in the world of financial management, these costs may seem prohibitive, but it is important to remember that just like any investment, the upfront cost has the potential to yield high returns. 

How Much Does a Wealth Advisor Cost? 

Most wealth advisors charge a percentage of their clients’ assets under management (AUM). The percentage typically ranges from 1% to 3%, and it is influenced by the size and complexity of the account. Unlike financial advisors, wealth advisors do not usually offer flat or hourly fees. By charging a percentage of AUM, they are incentivized to maximize your return. Further, wealth advisors who claim the designation of fiduciary dedicate themselves to making every decision with a client’s best interests in mind. 

Partnering with a Wealth Advisor 

Selecting a representative to manage your wealth is one of the most important decisions that you will ever make. Ideally, it’s a decision that you will only need to make once. Wealth advisors take great pride in the relationships that they form with clients, and your initial consultation is crucial to forming a long, fruitful partnership. Be sure to take the time to learn about their fee structure, their qualifications, and the services that they can provide to help you reach your financial goals. 

At Morgan Rosel Wealth Management, we provide family-office style wealth management and high-net-worth financial planning to individuals and families. Our comprehensive approach to managing wealth includes in-house CPA and estate planning attorney partners and our fiduciary wealth advisors who are also CERTIFIED FINANCIAL PLANNERS™. We will always have your best interests in mind as we guide, guard, and help grow your wealth. If you are ready to take the next step in securing your financial future and preserving your legacy, contact us today.