Financial advising is no laughing matter— or is it? At Bill Good Marketing, we know financial advisors take their work seriously—how could you not? Between the stock market’s roller-coaster antics, the stresses of tax season, and trying to explain compound interest without your client’s eyes glazing over, you’ve got a lot on your plate. But let’s be honest: this business ...
If you’re interested in a career in finance, you might know at this point that there are several financial services you can specialize in.
One of those paths is to advise clients directly. But, did you know that even on that path there are two main options? You can either focus on your client’s investments or you can focus on their entire wealth.
There seems to be some confusion online about the difference between the two. That stems from the interesting titles that are given depending on which company you belong to, how long you’ve been in the business, or even how many clients you are serving.
The ultimate key though? For the purposes of this article, let’s look at the general term of a financial advisor as someone who generally advises clients on just investments. If you’ve decided to focus on the complete wealth picture for your clients, you are more likely to be called a wealth manager. Wealth management could be the most lucrative, while financial advisors are one of the most common.
In this article, we’ll discuss the education and experience required, as well as the average salary, job outlook, and work-life balance for each profession.
Before we dig deeper, let’s start with what financial advisors and wealth managers actually do.
A Financial advisor is a financial professional who provides advice to clients on how to manage their finances. This includes all sorts of specializations, such as financial planning, investment management, estate planning, and retirement planning.
The key difference between financial planners and wealth managers is the range of advisory services they offer.
Financial planners are focused on helping individuals plan for the future and lifestyle planning. They assess their clients’ financial situations and help develop financial plans to achieve certain financial goals. A few personal finance goals include saving for retirement, saving for children, or clearing debts.
Wealth managers, on the other hand, are more focused on offering wealth management services – in other words, preserving and managing the wealth of their clients. Wealth managers usually serve high-net-worth individuals (HNWIs) or ultra-high-net-worth individuals (UHNWIs).
They’ll often work with their clients to do portfolio management and investment advisory that generates returns and builds wealth. Aside from investment advice and strategies, you might also need to help with tax planning, picking out life insurance policies, estate planning, real estate management, and all other financial needs your clients might have. Additionally, wealth managers may also offer more personalized financial advice and strategies to help clients achieve their goals.
While most successful financial advisors have a bachelor’s degree in finance or related fields, this isn’t a requirement for most entry-level job opportunities in finance. You can break into the industry fairly easily — if you have enough knowledge about financial products and markets and are good with people.
Taking the certification exam from the CERTIFIED FINANCIAL PLANNER™ Board of Standards and getting the CFP® designation, while not required, can help you stand out from the competition.
The CFP® Board enforces ethical practices for financial planners and turns you into a fiduciary for your clients. Some clients might know this. Some might just be advised by others to look for planners with a CFP® designation. Either way, the designation will boost your credibility in your client’s eyes.
On the other hand, wealth management is a bit harder to get into.
You’ll need at least a bachelor’s degree, and some firms prefer you have a master’s degree as well.
Additionally, most wealth managers have a good amount of experience. You need at least three to five years of experience to be a Chartered Wealth Manager (CWM), a popular designation for wealth managers.
Most wealth managers have a Certified Public Accountant (CPA) designation, and some are even licensed attorneys. If you’re working with clients who have net worths of $5 million and above, you may also want to take the Certified Private Wealth Advisor (CPWA) designation.
While they have different day-to-day tasks, their primary responsibilities are to work with people.
All financial advisors need to be able to understand the client’s needs and explain financial concepts clearly to clients.
As both need to explain recommendations and have discussions with clients, being a good communicator is necessary for both positions.
Additionally, wealth managers may have an easier time starting their careers if they have a strong natural market of high-net-worth individuals (HNWIs). Finding and gaining their trust is tough — we’re talking about assets worth millions of dollars here. Starting with a strong network helps you get your first few clients and demonstrate your ability as a wealth manager.
Most wealth managers also focus on asset management and actively manage a client’s investment portfolio. On top of that, you might have to coordinate with other professionals — such as attorneys — to complete your tasks.
According to the Bureau of Labor Statistics (BLS), personal financial advisors have a median pay of $94,170 per year.
According to Comparably, CERTIFIED FINANCIAL PLANNER™ or CFP professionals have an average salary of $121,000 while Wealth Managers have an average salary of $186,000. The statistics are for New York and San Francisco, respectively, where they’re most well-paid. The data for wealth managers also shows that the middle 57% makes between $111,000 to $280,000. This data shows that wealth managers have a high earning potential.
Additionally, your salary might differ based on various factors, including your payment structure, the size of assets under your management, and the performance fee you get from each client.
Wealth managers often focus on a handful of clients since they need to offer a comprehensive suite of services.
It’s common for wealth managers to charge based on an annual fee or a percentage of their client’s balance — or what’s called the Assets Under Management (AUM) structure. Considering that your clientele will consist of high-net-worth clients, it’s natural to expect a bigger fee from one client.
On the other hand, financial advisors are often not as involved. You might only need to check in with your clients a couple of times a year as a financial advisor. This allows you to take on more clients compared to wealth managers.
How much you make will depend on how you get paid. As a fee-only financial advisor, your only source of income will be from your clients. Depending on the pay structure, you might get paid a flat rate annually, hourly, or using the AUM model. On the other hand, fee-based advisors receive compensation from client fees, as well as commissions from specific investment products they’re affiliated with.
According to the BLS, there were 300,330 jobs in 2021 in the financial advising field.
But that number is expected to grow by 15% in the 10-year period between 2021 and 2031. This is a much larger number than the average 5% for all occupations recorded by BLS.
The main driver of this number would be the generational shift happening over the next decade.
As the population ages, more people will need retirement planning services. As baby boomers retire, they’ll transfer their wealth to their children and grandchildren, who’ll need financial advisors or wealth managers to help them manage it.
The work-life balance for both professions will vary depending on various factors.
However, considering wealth managers have much fewer clients, they’ll be able to have more work-life balance compared to financial planners.
If you work at a firm, their policies also factor into your work hours. For example, advisors at some wealth management firms are often required to travel and consult with their clients face-to-face. While others promote remote consultations instead.
In addition, people who recently joined the industry might need to put in more effort to build their client base.
The key difference between the two is that wealth managers typically have a more holistic approach to their client’s finances, while financial advisors tend to focus on creating financial plans to reach specific goals.
Whether you’re new to the industry, or recently went solo from your firm, having your own business means you’re responsible for its growth.
You’re giving your 110% to improving as a financial advisor AND making sure that you’re giving your clients the best experience.
Sometimes, you can’t do it all.
Get the plug-and-play lead generation system that you can use to get clients and fuel your growth with Bill Good Marketing. Call 888-495-7303 for a consultation or put your name on the list so we can reach out.
If you're interested in a career in finance, you might know at this point that there are several financial services you can specialize in. One of those paths is to advise clients directly. But, did you know that even on that path there are two main options? You can either focus on your client's investments or you can focus on ...
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