A wealth advisor is a professional who is hired to provide investment and money management advice to individuals, families, and businesses. Despite the title, a wealth advisor’s services are not limited to those who are traditionally wealthy. Wealth advisors can assist with anything from budgeting and cash management to asset diversification, estate and tax planning, and retirement investment planning. Wealth advisors are usually accountants or lawyers who are well-versed in the relevant inheritance and tax laws. Advisors are frequently employed as members of a firm’s investment or strategy team, but they can also work independently.
A wealth advisor’s main goal is to assist clients in structuring their finances in a way that is both advantageous and profitable. The advisor will evaluate the client’s entire financial situation, taking into account assets like stocks, retirement accounts, bank accounts, and tangible assets, before making recommendations for action. The recommendations should be tailored to the client’s preferences. Some clients simply want to maintain their current financial situation, while others want to diversify their investments, reduce their tax liability, or plan for the distribution of their assets to their children and grandchildren. In all of these areas, and more, a wealth advisor can make recommendations and take action.
Because a wealth advisor will have access to sensitive financial information and will, in many cases, be managing money in multiple accounts, trust is a critical component of the advisor-client relationship. As a result, many people select wealth advisors based on their previous experiences. For example, a couple may request that their tax accountant also structure their estate, or a businessman may request that his corporate lawyer review his investment portfolio. Accountants and lawyers, at least in the United States, are usually licensed to do wealth planning and advising regardless of their specialty, but they may not always have the necessary knowledge. While trust is the most important factor to consider when choosing a wealth advisor, expertise and experience are also important.
The investment and tax planning world is complicated, with different rules in different jurisdictions. The best wealth advisors typically have a lot of experience with investment structuring and money management, as well as a working knowledge of local and international transfer laws, if necessary. Many wealth advisors work in firms with a network of experts who can be consulted quickly. Prospective clients can usually interview wealth advisors prior to meeting with them in person, which is a good way to get a sense of the advisor’s personality and assess personal rapport. Clients can also use an interview to find out where the wealth advisor received his education, how he conducts business, and how much experience he has.
Wealth advising is often an exclusive job function for those who do it, even though the advisors are almost always first lawyers or certified accountants. Some people go into accounting or law with the goal of becoming a wealth advisor, while others begin as general practitioners and work their way up to wealth advising. Fees for wealth advisors vary depending on the advisor’s experience and reputation, location, and the complexity of the assignments, but are generally comparable to the top fees for tax and legal professionals.