Private Wealth Manager vs. Financial Planner: What’s the Difference?

Coryanne Hicks

The financial industry is proving to be better at coming up with new names for its products and services than bartenders who concoct new drinks. In the industry’s defense, there are probably more ways to combine investments and financial plans than there are liquor and soda. But does there really need to be both a “private wealth manager” and a “financial planner,” for instance?

Many would argue in the negative and say private wealth management is just a fancy term for financial planning that makes the manager in question sound more upscale. Like Blanton’s is to Jim Beam; at the end of the day, they’re both still whiskey. But the other side of the debate may say the flavor each leaf on your tongue, and the dent they leave in your wallet, are far from interchangeable.

Likewise, the services and experience of working with a private wealth manager can be wholly different from that of working with a financial advisor.

Private Wealth Manager vs. Financial Advisor

“There is no strict definition for financial planners and wealth managers,” says Zach Ciampa, a certified financial planner at John Hancock. Therefore, there is a lot of overlap between the two roles and the services each provides.

That said, if a distinction must be made, it’s generally at the client asset level. As the name suggests, private wealth managers tend to deal with higher-net-worth clients. A financial advisor may have clients with $100,000 to $5 million in assets, for instance, while a private wealth advisor may work with clients who only have upward of $20 million.

There is no clearly defined threshold where one moves from financial planning to wealth management, but some experts say it likely lies in the $5 million to $10 million range. Other firms would put any client with more than $1 million into private wealth management.

Given that the needs and options available to a client with $20 million vary from those of a $1 million client, the role of a private wealth manager and financial planner can differ.

“A financial planner will look at a client’s financial picture and create a personalized plan to help them achieve their short- and long-term financial goals,” Ciampa says. “(They) help clients analyze their goals and implement strategies from a comprehensive lens.”

A financial advisor’s role may end with a written plan and recommended next steps. Private wealth managers, on the other hand, often become involved in the actual asset management.

“Wealth managers will usually have clients’ assets under their management and actively handle their portfolio,” Ciampa says. Estate planning is also more likely to factor heavily in a private wealth manager’s daily activities, given the higher net worth of her clients.

“While both professionals provide basic financial advising services like goal planning, investment management services and some limited tax and estate planning, a private wealth manager takes a much deeper, comprehensive and more proactive role (with) a client’s wealth management,” says Nathan Imboden, a certified financial planner who serves as vice president and personal CFO at Questmont Strategic Wealth Advisors.

He breaks the distinction down into what he calls the “two C’s:” complexity and collaboration. “A private wealth manager will address more complex client situations like advanced charitable planning, multigenerational estate planning, business succession, family governance (and) advanced portfolio tax management,” he says. “This is done through a well-coordinated team of professionals,” which can include legal advisors, tax advisors and business consultants.

A private wealth manager will spend more of her time interacting with these other professionals on her client’s behalf. There’s more “behind the scenes” work when you’re a private wealth manager to help you optimize the time actually spent with your client, Imboden says.

What Makes a Successful Private Wealth Manager vs. Financial Planner?

Given the distinction between their two roles, being a successful private wealth manager requires a different set of skills than a successful financial planner.

“Both professionals need to be able to prove to clients they are capable of helping them with their wealth planning needs, but the private wealth advisor also needs to prove to other experts they are capable of taking the lead in the wealth planning process,” Imboden says. “This requires advanced skills in managing a team, rather than just managing a client relationship.”

Wealth managers also need more investment management expertise. “It’s important for them to achieve an appropriate risk-adjusted return,” Ciampa says. “They must manage wealth in an effective and prudent manner.”

Since financial planners don’t often directly manage their clients’ investments, their set of skills can lie elsewhere, such as in understanding their clients’ goals and using them to create a plan that will help clients achieve those goals. “It’s crucial to lay out all options for meeting those goals, while also trying to account for as many variables as possible,” Ciampa says.

Whether someone is a financial planner or private wealth manager, the core of the job remains the same: They are there to help clients achieve the financial future they desire. The only difference between a financial planner and private wealth manager is the level of involvement they take in the process.