Financial adviser vs wealth manager

These two titles are used loosely, differ by market, and in many places are not legally defined at all. A firm may call itself either. So rather than trying to settle what the words mean, it is more useful to work out which service is on offer.

What the titles usually signal

Financial adviser typically suggests advice on a defined question or a plan across your finances — retirement, protection, tax-efficient saving, what to do with a lump sum. Engagements are often one-off or periodic.

Wealth manager typically suggests ongoing management of a portfolio, often bundled with planning, and usually aimed at larger sums. There is frequently a minimum.

Those are tendencies, not rules. Plenty of firms described as advisers manage money continuously, and plenty described as wealth managers do planning work.

The questions that actually separate them

Is anybody managing investments on an ongoing basis, and who decides?

Under a discretionary arrangement the firm makes decisions within an agreed mandate without consulting you each time. Under an advisory one it recommends and you decide. Discretionary costs more and requires more trust; advisory takes more of your attention.

Is this a plan or a service?

A plan is a document and a conversation, and it can be bought once. A service is ongoing and priced accordingly. Both are legitimate. Paying service prices for a plan is not.

Is there a minimum?

Firms oriented towards portfolio management often require a minimum investable amount. If you are below it, you may be offered a lighter version of the service — worth knowing before rather than after.

How the pricing usually differs

Planning work is often a fixed fee or hourly. Ongoing management is usually a percentage of the assets managed, sometimes tiered.

A percentage fee is worth converting. On a substantial portfolio, one per cent a year is a large amount of currency and it is charged whether the year went well or badly. That is not an argument against it — managing money is work — but it should be a number you have seen written down rather than a percentage you nodded at.

Watch for layers. The firm's fee, the fees of the funds it uses, platform or custody charges and transaction costs can all apply. Ask for the total ongoing cost, including underlying products, as a percentage and in currency.

Regulation

Both activities are usually regulated, though sometimes under different permissions. What matters is that the firm is authorised for what it is proposing to do for you, which you can check on the relevant public register rather than taking on trust.

Which do you need

If you have a question — can I retire, what do I do with this inheritance, how do I structure this — you need planning, and you may need it once.

If you have a sum you do not want to manage yourself, and you want somebody accountable for it continuously, you need ongoing management.

If you want both, ask how they are priced separately. Bundling is common and convenient, and it is also how a one-off piece of work ends up on a recurring percentage fee for a decade.

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This guide explains how these services differ. It is not financial advice and it does not recommend any firm listed in this directory. Titles and regulatory requirements vary by country; check the relevant register for what a firm is authorised to do.