Types of Wealth Management Firms

Time to read: 5 Minutes

High-net-worth individuals looking for financial guidance often turn to wealth management firms. The reasons for this are plentiful.

With a large amount of assets comes financial complexity. Working with a trusted professional helps individuals and families feel confident that their wealth is structured to help them reach short- and long-term goals, be prepared for large milestones, reduce their tax burden, and effectively structure their estate.

Of course, there are several types of wealth management firms, with each one providing a different level of services and resources to their clients. Some firms are primarily focused on investment advice and asset management, while others provide comprehensive financial planning services or even management of day-to-day finances.

Keep reading to learn more about what each type of wealth management firm does to determine which may be right for you.

Private Banks.

Many banks have specialized branches that provide personalized wealth management services to high-net-worth individuals. The exact services offered depend on the exact institution, but often include investment management, estate planning, tax planning, and banking services.

While many types of wealth management firms are reserved for individuals with a specific amount of assets, clients typically only qualify for private banking services if a minimum amount of assets or money is held at the bank. This may include having a certain dollar amount in savings or CD accounts or investing a certain amount of money through the bank.

One benefit of private banking is that there is one central location where all of (or a large amount of) your money is held and managed, which can feel simpler than having money in various banks, investment accounts, assets, and more.

However, having all of your money in one location can also create liability. The FDIC insures private banking accounts up to $250,000 for individual depositors, so money in excess of that within the accounts may not be insured, depending on how the accounts are structured.

Additionally, private banks often have higher fees than other types of wealth management firms, and, because many banks sell in-house proprietary products, there may be a smaller number of investment options or concerns over conflicts of interest.

Registered Investment Advisors (RIAs)

A registered investment advisor (RIA) is an individual or firm that is registered with the SEC or state authorities, depending on the amount of assets they manage.

RIAs offer comprehensive asset management services for their clients, including building customized portfolios. They are typically fee-based, independent organizations that generally offer a wide range of investment products that their clients may use.

The minimum investment required to become the client of an RIA will vary based on individual advisors or firms, but it is typically high.

Additionally, while some RIAs do offer comprehensive financial planning services, the focus is typically, as the name would suggest, on investment advice.

Financial Planning Firms.

Financial planning firms are made up of financial advisors who are experienced in providing holistic, comprehensive financial planning services.

A financial advisor uses information about their clients’ goals and financial situation to create a detailed plan that includes investment management, retirement planning, estate and legacy planning, tax planning, and strategies to reach individual goals on specified time horizons.

Financial planning firms that have experience working with high-net-worth individuals would also be considered wealth management firms. In fact, many financial planning firms or advisors specialize in working with high-net-worth individuals, as they understand how to navigate financially complex situations and unusual tax circumstances, and are able to offer tailored advice.

Family Offices.

In addition to financial planners that offer comprehensive financial planning services, there are private wealth management advisory firms that offer holistic financial services.

Family offices are firms that exclusively serve ultra-high-net-worth families, often with a minimum of $100 million in assets.

In addition to providing the same essential financial planning services as a financial advisor, they are also responsible for completing day-to-day financial tasks. This can include concierge services, bill planning and payment, and facilitating family governance. They are, essentially, a dedicated in-house team for the families they work with.

This extremely high involvement in day-to-day planning means that most family offices only serve a few, or even only one, family. Naturally, this makes them significantly more expensive to work with, with fees sometimes as high as $1 million annually. To learn more about wealth management services at The Tranel Financial Group, contact our team today!a financial resource that is blindly trusted. AI is great at providing information, but there are no guarantees that information is 100% accurate, lacks bias, or fully explains the nuance involved in financial decision making. Always be sure to verify information and advice with credible, trusted sources and professionals.