What Is The Difference Between an Investment Broker and a Wealth Manager?

One common question we hear is “What is the difference between a Wealth Manager and an Investment Broker?” In order to clear up this confusion we will break down each specialty and go through a couple of the things that differentiate each position.

Investment Broker

Much like the term would suggest, Investment Brokers are licensed professionals that facilitate investment securities transactions between buyers and sellers. A full-service investment broker’s job is to work with a client to recommend investments, and to buy and sell securities on a client’s behalf. Investment brokers must follow the rule of suitability when making investment recommendations.  In short, an investment is suitable if one can withstand the loss.

Clients can also direct trades inexpensively and easily through a discount broker. They will not provide any recommendations or guidance; discount brokers simply serve to execute the trades that you request.

When is the right time for an investment broker?

In order to take the step into investing you will need a licensed broker to buy or sell stocks and other securities on your behalf. It is up to you how much involvement or guidance you would like along the way.  Individuals with a substantial investment portfolio may prefer a full-service investment broker, while a discount broker might be the right choice for someone just getting started.

Investment brokers make their living from the products that they sell, whether by charging clients a commission for each transaction they perform, or from the underlying fees associated with the investment product, such as a mutual fund. Some may charge a fee to open a client account with them or require a specific minimum amount in your investment account. So be sure to do your research before opening an account with any investment broker.

The Financial Industry Regulatory Authority website is a great resource to find your prospective brokers’ credentials and employment history. It is important to find a broker with a clean track record.

Wealth Manager

Wealth management is a more holistic approach to your finances. Wealth managers are fiduciaries that provide clients with comprehensive financial solutions. By taking a look into all aspects of their client’s finances they can personalize a strategy that uses a variety of financial products and services.

Wealth managers serve high net-worth individuals (HNWI) and ultra- high net-worth individuals (UHNWI), with the goal of managing, growing and preserving their wealth. As reference, the U.S. Securities and Exchange Commission (SEC) defines a high-net-worth individual as someone who has at least $1,100,000 in assets under management, (AUM) or has a net worth of $2.2 million or more.

The duties of a wealth manager may include:

● Investment advice

● Portfolio management

● Estate planning

● Retirement planning

● Tax planning

● Portfolio balancing

● Philanthropic planning

● Insurance planning

● Family legacy planning

● General long-term financial planning

Wealth managers are not a short-term fix, or a one-time advisor. They are a long-term financial partner that will help provide financial solutions. Wealth managers typically charge their clients a fee based on the number of assets a client has under management. When choosing a wealth manager, be aware of their account minimum as well as what certifications and experience they might have.

At Ulrich Investment Consultants, our mission is to earn your enduring trust and confidence by offering valuable insights. We are ready to answer any questions you may have and start finding solutions for you. Reach out to us here: https://ulrichcg.com/contact-us/