Wealth management is a type of financial advisory service in Canada targeted at individuals with a lot of assets to invest.
But this doesn’t just mean ultrarich celebrities – it could also mean people who are near or in retirement with hundreds of thousands of dollars in investments.
A wealth manager usually helps their clients with a combination of different financial needs, like investments, taxes, estate planning, and more.
Here’s everything you need to know.
What is wealth management?
In short, it’s a type of financial planning service that offers support for many different areas of your finances.
You can think of a wealth manager as a one-stop-shop for all your money needs – whether it’s planning your estate, figuring out retirements, or trying to save on taxes. Your advisor will take care of everything, even coordinating communication between other professionals (say, attorneys) for you.
Let’s answer some of the main questions people tend to have about the service.
What do wealth managers do?
Wealth management is usually a very personalized program that depends on the needs of your finances, but here’s a common list of services they tend to provide:
- Setting up and managing retirement accounts and investments.
- Analyzing and rebalancing your investment portfolio.
- Improving the management of your cash flow.
- Aiding with the establishment and planning of your estate.
- Helping you with taxes and other financial obligations.
When you meet with your new wealth manager for the first time, you’ll likely go over the kind of services you’ll need from them in a more private and personalized manner then.
How do wealth managers make money?
There are 3 common ways that wealth managers make money in Canada.
The first is commission-based salaries, where they don’t ask you for any fees up front, but they earn money through the investments you choose to put your money into. Though it’s nice to feel like you’re getting their services for free, this could introduce bias and expensive hidden fees into the process.
Fee-only wealth managers get paid either annually, monthly, hourly, or at a flat-rate. Their fees are the most upfront and transparent, which makes them more trustworthy.
There are also fee-based wealth managers out there that offer a combination of the two types of payment systems – asking for a flat fee upfront, while also earning commission on certain investments.
What is a wealth plan?
A wealth plan is likely what you’ll be discussing with your wealth manager. It’s a combination of your personal finance goals as well as the tools you and your advisors are planning to use in order to achieve them.
Though this will mostly be about your investment goals, other elements of your financial planning can be included in your wealth plan as well – including estate planning, tax saving strategies, and more.
Who is wealth management for?
This service is targeted at 3 main groups of people:
- people near retirement with a large amount saved up,
- wealthy individuals, and
- business owners.
And what do these 3 groups have in common? They have a lot of money and capital and they want to make sure they’re doing the most they can with it.
Have you started saving for retirement yet? Here’s the motivation you need to get started.
How much money do you need to qualify for wealth management?
In short – a lot.
Though most wealth management companies don’t display the exact requirement on their landing pages. Presidents and CEOs interviewed in this 2018 article by The Globe And Mail say that most firms deal with customers with at least $1 million in assets.
That said, the exact amount will vary based on the company and the advisor you’re matched with.
But in general, wealth management is meant for individuals with a lot of money that needs to be shuffled around. People with more manageable assets can still get plenty of help from financial advisors and portfolio managers.
Is wealth management worth it?
So what are the reasons you may want to consider this service – and what are the downsides?
Here’s a summary of the pros and cons:
| Wealth management | |
|---|---|
| Pros | * Personalized, expert opinions * Holistic approach |
| Cons | * Can have high or hidden fees * Limited to people with a lot of money |
Let’s take a closer look at each.
The pros of having a wealth manager
Having a wealth manager can be an extremely helpful way to make sure your money is doing everything it should be.
Personalized expert opinions
It can be scary to have a lot of money under your control – and terrifying to make huge financial decisions that involve life-altering consequences.
If you pay for wealth management, you’ll have professional and personalized advice for every step of your finances. This can be a huge sanity saver and also help you use every cent to the best of its abilities.
A holistic approach to your finances
Instead of having to keep track of your investment advisor, tax specialist, lawyers, and other professionals – you can leave it all to your wealth manager.
They’ll often even coordinate communication between different professionals as needed, making your life that much easier.
The cons of having a wealth manager
But keeping an eye on how much your wealth manager is costing you is also important.
Can have high or hidden fees
Depending on their fee model, a wealth manager may have fees that aren’t straightforward. You could feel like you’re getting their advice for free, when really they’re taking a huge cut out of your profits that you don’t even get to see.
It’s important to discuss the fees in detail. If they’re commissioned based, make sure they have your best interests in mind – and not their own wallet.
Usually limited to people with a lot of money
Though most wealth management firms don’t list the exact amount of money you need to qualify for their services, it’s safe to say that the number is fairly high for most places.
If you don’t have hundreds of thousands of dollars in assets ready to be invested, you’ll likely be directed to a financial advisor instead.
Wealth management alternatives
How do wealth management services differ from other financial services?
Wealth managers vs. financial advisors
At a basic level, wealth managers are a type of financial advisors.
Financial advisor is a broad term that refers to many different types of professionals that help their clients with their financial needs. For example, a certified public accountant (CPA) and certified financial planner (CFP) are both types of financial advisors.
The major thing that sets wealth managers apart from other types of financial advisors is the fact that they’re mostly focused on wealthy clients. In contrast, financial advisors can serve a variety of clients at many different income levels.
Wealth managers vs. portfolio managers
Though both wealth managers and portfolio managers are types of financial advisors, they’re not the same.
Wealth managers, as discussed, deal with several different aspects of your finances. Portfolio managers, on the other hand, focus on optimizing your investment portfolio first and foremost.
On top of not being as broad ranging, portfolio managers also cater to a broader range of clientele, since they don’t have such high asset requirements.
Where you can find a wealth manager near you
If you’re wondering how you can find a wealth manager, asking your bank may be the easiest place to start.
Here are some of the more popular firms available, including the big 6 banks:
| Company | Interested? |
|---|---|
| RBC Wealth Management | Learn more |
| Scotia Wealth Management | Learn more |
| CIBC Wealth Management | Learn more |
| BMO Wealth Management | Learn more |
| TD Wealth Management | Learn more |
| National Bank Wealth Management | Learn more |
| IG Wealth Management | Learn more |
| Assante Wealth Management | Learn more |
Unfortunately, they each have one thing in common: not having a whole lot of information available to the public. In order to learn about their services, you’ll have to call and book an appointment to learn more.
But since big banks tend to charge higher fees than independent companies, you could also search for a local firm near you. All you have to do is Google “wealth manager” plus your city name to get a personalized list.
Here are the results for Halifax, for example:
You’ll get even more options by clicking “View all” and can even read reviews to get a feel for the person before committing.
FAQ
What is wealth management?
Wealth management is a type of financial advisory service that provides a holistic approach to all your financial needs. It’s usually targeted towards people with a high level of investable assets under their control.
How much money do I need to qualify for wealth management in Canada?
This depends on the firm you’re going with, but it’s usually in the hundreds of thousands of dollars – sometimes even a minimum of $1 million is required. Learn more about the target clientele of wealth management here.
Do I need wealth management?
If you have a large amount of wealth and need advice on what to do with it, then you may want to consider wealth management. Your advisor could help you in every aspect of your finances, even organizing communication between different professionals for you. Check out the pros and cons here.
Where can I find a wealth manager in Canada?
Most big banks have a wealth management service (we’ve listed the top 8 here). But, like most financial services, big banks tend to charge higher fees for the convenience of having all your finances together. You can find independent wealth management firms near you which may have cheaper fees. As usual, research is always important.
Is a wealth manager the same thing as a financial planner?
Though both a wealth manager and financial planner are types of financial advisors, they’re not exactly the same. This is mostly because of their clients – a wealth manager focuses on clients with a large amount of wealth (say, someone close to retirement), whereas a financial planner has a broader client base.
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