Asset vs. wealth management: Differences + Who to hire

Personal finance is so much more than just your monthly budget. Once you fold in retirement, investments, and taxes, things get complicated and time consuming. 

So, more people are turning to professionals to navigate their finances. In fact, 35% of Americans worked with an advisor in 2022. 

But what type of advisor is best? The difference between asset management vs. wealth management boils down to your goals. 

Wealth managers are more comprehensive, full-service advisors, while asset managers focus on investments.

Let’s dig into these different types of advisors and how to start down the road to financial freedom. 

What is asset management?

Asset managers are also sometimes called investment or portfolio advisors, which might make their specialty a little more obvious. These advisors focus on your personal investments — stocks, bonds, mutual funds, and other wealth-building assets. 

Services include:

• Personalized recommendations based on your goals and risk tolerance.
• Portfolio rebalancing to manage risk and keep your strategy on track.
• Asset maintenance, which includes strategy, buying and selling assets, and monitoring performance to maximize returns. 

Once you discuss your financial goals and create an investment strategy, your asset manager will handle your portfolio and provide regular updates. A large part of this will be watching performance and rebalancing your portfolio to maintain your target asset allocation. 

Your portfolio is typically divided between stocks (higher risk, higher potential returns) and bonds (more secure, lower typical returns). 

Your asset manager will help you identify your ideal allocation, but 70% stocks and 30% bonds is pretty typical for someone with a decade or more before retirement. 

For example, if your stocks grow to represent 77% of your portfolio, you and your manager might discuss selling some assets to reset your portfolio to the target balance. 

It’s also common to revisit your target allocation and adjust as your goals change. 

For example, someone aged 58 with kids might shift towards secure bonds. They’re thinking about preserving their retirement and estate by this age since they don’t have decades to recover from a loss in riskier stocks. 

What is wealth management?

Wealth management is a little more big-picture. These advisors provide holistic investment advice and tend to your other financial needs, like tax and retirement planning. This direction allows you to better manage your wealth-building strategies over time. 

So, what does a wealth manager do? 

• Financial planning, including an analysis of your current situation, budgeting assistance, and goal-focused strategies.
• Asset management to direct and maintain your investments. 
• Retirement investment strategies and planning to reach and fund your golden years.
• Estate planning to create wills and trusts, name beneficiaries, and direct asset distribution once you pass. 
• Tax planning to reduce your tax liabilities with tax-advantaged investments and strategies.

Wealth managers are valuable, but they’re also specialists for high-net-worth families. They know how to get high-earners through backdoor Roths, harvest losses to offset capital gains, and manage multi-million-dollar investments.

It’s also worth noting that this isn’t actually an official advisor designation. Many wealth advisors are Certified Financial Planner™ (CFP®) or Chartered Financial Consultant® (ChFC®) professionals with a specialty. But if you’re not rolling in millions, you can still get full-service financial support from other CFPs who don’t have minimum asset requirements. 

Asset vs. wealth management: Key differences

Asset managers dig into your investment details, while wealth managers maintain your overall financial health and planning. You have the basics, but there are a couple of other differences to know. 

Fiduciary duties: Wealth managers have your back

Both advisors should prioritize your financial well-being, but only wealth managers who are CFPs have a legal fiduciary duty to prioritize your best interest over their own and the interests of their firm.

An asset manager with AAMS accreditation is still held to a fiduciary responsibility, though CFP fiduciary expectations are the gold standard.

Non-fiduciary advisors are still interested in your investments doing well so they don’t lose you as a client. But they’re also considering their firm’s interests, which might align with specific investments.

That’s not to say you can’t trust an investment advisor. Just understand that their legal responsibilities aren’t the same. 

Financial goals: Investment focus vs. a full financial picture

Many high-earners benefit from both asset and wealth management, but not everyone needs that much support. Ultimately, it depends on your financial goals. 

If you’re focused on wealth-building investments, an asset manager can help you evaluate your goals, create a strategy, and manage your investments to get you to the finish line. 

On the other hand, a wealth manager can act as a compass for your financial future. They’ll also evaluate your current situation and goals beyond investments. They want to know when you’re retiring, your career goals, who you want to inherit your home, and more. 

If you need a little more support to work out your roadmap, connect with a CFP. Choose a wealth management firm if you’re a high-earner. 

Primary clients: Asset management serves more people

Every investor can benefit from asset management, but not everyone needs a wealth manager rather than a regular advisor. 

Asset managers work with individuals, high-income earners, corporations, and institutions of all sizes. 

Wealth managers are a little more particular. They specialize in finances for high-net-worth families. We’re talking asset minimums in the millions just to work with the advisor. 

So asset managers serve your everyday investor, but you’ll need a good chunk of change to work with a wealth manager. 

The Playbook take: Don’t leave your finances to chance

Comparing asset vs. wealth management is kind of apples to oranges. Other than that broad “advisor” category, they’re totally different designations. 

Asset managers will take care of your investments, while wealth managers can help you navigate finances with a high net worth. 

Want a full financial picture but just a couple thousand short of a wealth manager? Playbook can help you evaluate your assets, reduce your taxes, and build wealth with a personalized financial roadmap.