The Basics of Private Wealth Management

This post was originally published in October 2019 and was revised and updated in November 2024.

As we reach retirement age, financial management requirements tend to increase in both scope and complexity. Unlike run-of-the-mill traditional financial planning, private wealth management offers a robust, comprehensive approach tailored to your unique and complex needs. The field serves clients who demand (and need) more than core financial planning, addressing investment management, tax efficiency, estate planning, and even lifestyle considerations.

Private wealth management can save you time and money, help you pursue your financial goals, and provide you with long-term financial well-being—but sometimes the process behind it all can feel ambiguous. Maybe you’re wondering what exactly a private wealth manager should be doing for you, and how.

Who Benefits from Private Wealth Management?

Private wealth management services primarily cater to high-earners and high-net-worth individuals (HNWIs) with unique needs based on asset values, earning power, and (frequently) unique compensation structures that combine high asset value and substantial earnings.

These individuals often include executives and senior managers nearing retirement after years of high earnings in corporate roles. As they approach retirement, they typically have a sizable net worth and significant wealth but face unique challenges in managing and preserving those assets while planning long-term retirement goals.

For this unique subset, private wealth management offers tailored services that address complex issues such as tax efficiency, estate planning, and risk management. With retirement on the horizon, they need a comprehensive strategy to transition from wealth accumulation to wealth preservation and income generation. These clients often seek guidance on structuring their portfolios to support their idea of a comfortable retirement, manage potential healthcare costs, and provide for future generations through legacy planning.

At the same time, corporate high earners may hold significant assets in stock options or company shares, which require sophisticated planning to leverage their value and minimize tax implications while preventing equity-based compensation traps like overconcentration. Private wealth managers offer knowledge to handle these situations, helping clients harness the benefits of their financial holdings and work toward their retirement goals with confidence.

Ultimately, a private wealth manager’s primary role is to generate new income to increase your assets and help you build your wealth. Initially, you’ll work together to create a plan that fits your vision for the future. Then your advisor or wealth manager will consider your short- and long-term goals to make the appropriate investment recommendations.

What Types of Private Wealth Management Are There?

Private wealth management services come in various forms, each tailored to the unique needs of different high-net-worth clients. Typical structures include family offices, large brokerages, and specialized portfolio management services. While family offices are often associated with ultra-wealthy clients, there are many ways for individuals at different wealth levels to access comparable services and benefits.

Family Offices: Traditionally, family offices serve ultra-wealthy families with comprehensive, personalized services ranging from investment management to tax planning, estate management, and philanthropy. 

Large Brokerages: Large brokerage firms offer a range of investment products and resources. While these firms may not provide the same level of personalized attention as a family office, they offer clients access to sophisticated financial tools and global market insights. 

Portfolio Managers: Focused exclusively on managing investments, portfolio managers build and oversee investment portfolios tailored to a client’s risk tolerance, financial goals, and market outlook. Although this service is often more narrowly focused than a full-service wealth management offering, it’s a great option for clients seeking a more hands-off investment approach.

Our Approach: We blend the best of each approach. We give each client the dedicated attention of a family centered office, the expansive resources of a large brokerage, and the targeted knowledge of skilled portfolio managers. We believe every client deserves comprehensive support and access to the same quality of services that ultra-wealthy clients get, striving for wealth management marked by care, proficiency, and personal attention.

What Services Does a Private Wealth Manager Offer?

A private wealth manager provides a range of services designed to help high-net-worth individuals develop, preserve, and transfer their wealth efficiently. The scope of these services is comprehensive, addressing clients’ financial and lifestyle needs through a tailored, strategic approach.

Investment Management

Private wealth managers create and oversee a customized investment portfolio based on the client’s risk tolerance, financial goals, and market outlook. This involves asset allocation, diversification, and regular portfolio adjustments to align with market conditions and personal changes in the client’s financial situation.

Financial Planning & Advice

From retirement planning to cash flow analysis, a private wealth manager develops a financial blueprint supporting current and future financial needs. This service helps clients be well-prepared for major life events and transitions, such as retirement, the sale of a business, or significant life purchases.

Tax Planning

Your wealth manager should also help you understand tax code and regulatory considerations and complexities, as well as help you choose the most efficient tax plan for your unique financial circumstances. The penalties for tax avoidance are steep, so having a partner by your side will help you avoid fees by under-paying taxes, or they can enable you to save more for your future by ensuring you’re not over-paying.

Estate Planning

Estate planning is a critical component for clients who want to leave a legacy or have a plan for their assets beyond their lives. Private wealth managers collaborate with legal advisors to develop estate plans that specify how assets will be distributed, working toward a smooth transfer of wealth to future generations while minimizing estate taxes and administrative hurdles.

Risk Management and Insurance

A private wealth manager assesses potential financial risks and offers approaches to help mitigate them, including insurance options that protect assets and future income. This can encompass life insurance, liability coverage, and strategies for asset protection against creditors or lawsuits.

Philanthropy and Charitable Giving

Wealth managers assist clients interested in making a philanthropic impact by creating charitable giving plans that align with personal values and tax strategies. This could involve setting up donor-advised funds, charitable trusts, or developing a structured plan for regular donations.

How Do Private Wealth Managers Get Paid?

Private wealth managers can earn compensation through various structures, which can affect the quality and impartiality of the advice they provide. Understanding these structures is a key piece of the puzzle when choosing a wealth manager aligned with your best interests. The primary compensation models include commission-based, fee-based, and fee-only arrangements, with fee-only often being preferable.

• Commission-Based: In this model, the wealth manager earns a commission on the financial products they sell, such as insurance policies, mutual funds, or annuities. While this approach can work for some, it may lead to conflicts of interest, as advisors might be incentivized to recommend products that generate higher commissions rather than those that align with the client’s best interests.
• Fee-Based: Fee-based wealth managers charge a percentage of assets under management (AUM) and may also earn commissions on certain products. While this model blends aspects of fee-only and commission-based models, it still leaves room for potential conflicts of interest, as advisors might favor certain products over others based on commissions.
• Fee-Only: A fee-only structure means that the wealth manager’s compensation comes solely from fees paid by the client, either as a percentage of AUM, a flat fee, or an hourly rate. Because there are no commissions or product-based incentives involved, fee-only advisors are generally more purpose-driven, focusing solely on the client’s financial needs and goals. This structure minimizes conflicts of interest, allowing the advisor to operate fiducially, always prioritizing the client’s best interests.

Why Choose Fee-Only?

Opting for a fee-only private wealth manager aims to ensure that you receive balanced, transparent advice. Without incentives tied to specific products or commissions, fee-only advisors have no financial motivation other than to help you pursue your financial priorities. Even when specific commission-based products are in play, such as insurance, fee-only advisors can help take an intentional look at the options and recommend ones that are in your best interest – not just theirs. 

Conclusion

Finding the right firm to preserve, manage, and mature your assets is essential. You want a private wealth management firm that works with you and for you—one that sees you as a person to build a relationship with, rather than just another portfolio to be managed.

At H&A, our wealth managers take flexible, multi-faceted approaches that aim to help you increase and manage your assets in the ways that make the most sense for your financial vision and goals. Your vision is our guidepost, so we leverage our knowledge in ways that allow you to take advantage of multiple techniques. We also work with other investment professionals or advisors you already have working with you, such as your attorney or another consultant, to help build a well-rounded and collaborative approach to your wealth management.

Understanding the basics of private wealth management can make the most of your money and your relationships. 

Ready to take the next step? Connect with us today to explore how our private wealth management services can help you pursue your financial goals. To learn more about our integrated approach to private wealth management, please reach out to us by calling 412-261-5966, feel free to email me directly at bobby.hapanowicz@hapanowicz-associates.com.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. 

Investing involves risk including loss of principal.  No strategy assures success or protects against loss.

This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.