When it comes to your finances, it may be intimidating to create a go-to strategy. Deciding the best path for your money, such as determining your risk profile and performance goals, can be complex if you are not a financial expert. Because of that, many people choose to get professional help. If you are one of those people, it is important to make sure you are consulting the right advisor for your needs. Wealth management is a popular option for people looking for professional financial assistance. If you are seeking the services of a wealth manager in Harvard, Massachusetts, this article will help you make the wisest decision to have your money best managed based on your needs, while also giving you alternatives to traditional wealth management.
First of all, many people don’t understand very well the difference between wealth management and financial advisors. Wealth managers are just one category of financial advisors who work with a broader approach to your financial life. For example, while some financial advisors only give investment advice, wealth managers also offer legal and state planning, accounting, tax services, and retirement planning. Many wealth managers can provide services for any facet of the financial field, but some specialize in particular fields.
Usually, wealth managers in Harvard, Massachusetts work with either one set fee or on commission. Those who charge one set fee can do it annually, hourly, or a flat fee. Those that charge a commission, are paid through the investments they sell. Then, fee-based advisors work on a combination of both fees and commissions on investment products sold. On average, for $1 million of assets under management, the advisory fee is 1%. However, smaller account balances tend to be charged a higher percentage. Generally, the more you have under the care of your wealth manager, the lower the fee is going to be.
It is also important to consider the minimum asset requirement to open an account with a wealth manager. This value can go from $250,000 to over $10 million, depending on the firm and professional you choose to hire in Harvard, Massachusetts.
The type of financial advisor you need depends on your needs and personal situation. In general, the financial holistic approach offered by wealth managers highly benefits individuals with a high net worth. That is because the highly tailored services of wealth advisors comprise most, if not all, financial aspects that a HNWI (High Net Worth Individual) may need for its personal and professional life. Also, the minimum asset requirement to hire a wealth manager can be an impediment for some.
However, not only the super-rich can use these services. Some professionals have a more affordable minimum asset requirement that can be as low as $250,000. Still, if you have a more specific demand or goal, wealth managers may not be a worthy investment. This type of service is ideal if you want comprehensive financial advisory planning.
Just like almost every industry, wealth management evolved with technological advancements. Embracing new tools such as AI, this financial advisory sector grew strong in the online sphere. Often called robo-advisors, online wealth management services use computer models to automatically create solutions to your financial needs. Online wealth management services can also advise you on how to best allocate your money, rebalance portfolios as needed, reinvest dividends, and others.
Online wealth management services have lower fees compared to traditional wealth advisors. Fees for robo-advisors can go from 0.25% to 0.5%, which is half or less of the fees of traditional wealth managers. This is possible because online wealth management services use quantitative financial algorithms processes by computers that demand very minimal human intervention. Therefore, online wealth management firms have fewer professionals to pay. On top of that, robo-advisers have lower expenses from physical spaces of work.
Another difference between online wealth management services and traditional ones is the minimum asset requirement. More often than not, robo-advisors minimum asset requirement is absent or as low as $1,000. This makes wealth management services more accessible to individuals that don’t have a high net worth.
If you read until here and you believe a wealth manager is the right option for you, the next thing to do is to choose the firm, professional or online service you want. There is no perfect answer on how to make this decision, but here are some main points you can take into consideration.
The minimum asset requirement and the fees are important aspects to take into consideration. These should fit your financial needs and overall net worth. Another factor that usually weighs in this decision is the wealth management’s investment performance and strategy. Again, what works for some cannot work for others and you should look for a wealth advisor that best accommodates your demands.
For traditional wealth advisors, the relationship with the individual also plays a strong role in the decision, since hiring a wealth manager will involve trust. It is also always beneficial to verify the professional’s credentials (if the person is a Certified Financial Planner) and track record with previous clients.
Ultimately, the decision will be made based on what you are looking for and which firm or company offers you the best match. Be that a wealth manager professional or a robo-advisor, this will be an important decision for your financial future. To help you, here are the best wealth management companies in Harvard, Massachusetts.