Your Money, Your Choice: Financial Advisor or an Experienced Wealth Manager in Nashville?

As a successful individual who has accumulated wealth, the question isn’t whether you need professional guidance to grow and preserve your wealth. It’s about choosing the right financial professional you can trust to help you pursue your financial goals.  

The process starts when you ask yourself: 

• What type of advice and services do I need?
• Who can I trust to provide that kind of leadership?
• What are my criteria for selecting the right type of professional to help me?
• Should I select a financial advisor or a wealth manager in Nashville? 

In this blog post, “Your Money, Your Choice: Financial Advisor or an Experienced Wealth Manager in Nashville,” we’ll delve into the distinctions between these two roles, shedding light on their services, expertise, and suitability based on your current financial needs and goals. 

This article will equip you with the knowledge you need to make an informed decision when you select a financial advisor or an experienced wealth manager in Nashville.

Read our popular Quick Guide, “Wealth Management in Nashville, TN.”

At first glance, financial advisors and wealth managers appear to provide the same services. They both offer financial advice to help enhance your wealth and typically possess a fundamental understanding of the financial markets. The terms are often used interchangeably, but they generally refer to different levels of service and areas of expertise. 

The reality is how they function, and their approach to managing your wealth can be as different as night is to day.

“Strength lies in differences, not in similarities.”

Stephen Covey

Here’s a closer look at the distinctions between a financial advisor and a wealth manager:

Financial Advisors:

The term financial advisor is a broad umbrella term for a financial professional who advises clients on their finances. This can cover various topics, from retirement planning to investing, budgeting, and debt management. 

These professionals can have a variety of different backgrounds and specializations. They can be paid with fees (a percentage of assets under management, an hourly rate, or a fixed fee), commissions on the products they sell, or a combination.

One of the primary roles of a financial advisor is to evaluate your financial circumstances, needs, and goals before making recommendations. This typically involves gathering information about your financial situation, including income, expenses, liabilities, and assets. It also includes understanding your financial objectives, risk tolerance, investment preferences, and goals. This is then used to develop a financial plan that outlines the strategies and products to help you pursue your financial goals. 

A financial advisor can also be involved in implementing your financial plan. This may involve purchasing or selling financial products like stocks, bonds, mutual funds, or insurance.

All financial professionals must adhere to suitability standards and ethics. The level of suitability is based on how they are compensated. If a financial advisor is receiving a fee from you for their financial advice and services, they will act as a fiduciary. If they are earning a commission from the sale of a financial product, like a mutual fund, they will fall under the suitability standard.

It pays to remember anyone can claim to be a financial advisor. It can refer to a firm or a professional. The ideal financial advisors will be registered financial fiduciaries who are compensated with fees by their clients.

Wealth Managers:

A wealth manager is a financial professional who typically works with high-net-worth individuals to help manage and preserve their wealth. They provide multiple services that address a wide range of their client’s financial needs. Following are some key responsibilities and roles of a wealth manager:

• Wealth managers create comprehensive financial plans considering your income, expenses, financial goals, risk tolerance, and future needs. They help you plan for retirement, children’s education, and other significant life goals.
• They help you identify investment opportunities that align with your risk tolerance and financial goals. This includes diversifying the investment portfolio, balancing risk and return, tax loss harvesting, and constantly monitoring the markets to adjust strategies.
• Tax planning is another function that wealth managers focus on.  They help minimize the taxes that can erode your wealth. This includes using tax-efficient investment strategies, offsets, and other tax-planning tactics.
• Wealth managers work with you to plan the distribution of your wealth after the demise of the surviving spouse. They often collaborate with estate planning attorneys to provide input for creating wills and trusts and the succession of family businesses.
• A wealth manager can identify and mitigate financial risks that impact your wealth. This includes insurance products: Long-Term-Care, life, disability, health, property, and other wealth protection strategies.
• Wealth managers can develop robust retirement plans that assess your income sources, planned (and unplanned) expenses, lifestyle choices, health care needs, inheritances, and longevity.
• Many successful individuals wish to give part of their wealth to charitable causes. A wealth manager can help set up charitable trusts or foundations and advise on tax-efficient giving practices.
• Wealth managers often coordinate with other professionals who serve their client’s financial needs. For example, Attorneys, CPAs, and personal bankers help ensure a holistic approach to managing wealth.

Given their clientele and the broader scope of services, experienced wealth managers usually require a higher minimum investment amount than the one required by a typical financial advisor. The expectation is wealth managers have more specialized knowledge, particularly in disciplines that impact wealthier clients, and they often provide a more personalized level of service when collaborating with your other trusted advisors.