An advisory firm builds and manages diversified portfolios for affluent clients but gives no advice on their taxes, estates, insurance, retirement or business succession. Measured against the defining characteristic of wealth management, what keeps this service from being wealth management?

Its clientele: wealth management is defined by serving ultra-high-net-worth families, and merely affluent clients fall below the ultra-high-net-worth tier

Its breadth: it covers the portfolio but leaves out the tax, estate, insurance, retirement and succession planning that a holistic service also takes on

Its regulation: wealth management is defined by registration as a broker-dealer, and a firm that manages portfolios is an investment adviser

Its pricing: wealth management is defined by a fee charged as a percentage of assets, and a firm that manages portfolios charges by the trade

A wealth manager at a registered investment advisory firm recommends a fund whose sponsor pays her firm a share of the fees the fund collects. Under the fiduciary duty of the Investment Advisers Act of 1940, what does that payment require of her?

Return of the payment to the sponsor, since an investment adviser is barred outright from receiving any payment from a third party

Disclosure of the payment if the client asks about it, since the duty is met by answering truthfully whatever questions the client puts

Disclosure of the payment to the client as a material conflict of interest, with advice that still serves the client's best interest

Approval of the fund by her state securities administrator, which must clear any fund that pays an adviser before it is recommended

A client with philanthropic goals and heirs in three generations asks what her wealth manager's comprehensive service can include beyond her portfolio and her tax, estate and risk planning. What does that service often add?

Philanthropic and multigenerational planning, which the firm handles within the same coordinated advisory relationship as her portfolio and taxes

Underwriting of securities, with the firm acting as lead underwriter when her family company raises capital from outside investors

Auditing of her company's financial statements, with the firm signing the opinion that its lenders and outside investors rely on

Legal representation of the family, with the firm's advisers appearing for it in court in probate and trust proceedings

A wealth management client already has her own estate planning attorney and her own accountant. In the wealth management service model, what is the wealth manager's role relative to those two professionals?

To follow their lead, carrying out the trades their plans call for while leaving every planning decision in the two specialists' own hands

To coordinate their work with her own, so that each part of the client's financial life is consistent with and complements the others

To refer each matter to whichever of them it concerns, leaving the attorney and the accountant to settle any conflict between their advice

To check their fees against market rates, since keeping the client's professional costs down is the main service a wealth manager provides

A client owns a primary residence worth two million dollars and holds six hundred thousand dollars in investable assets. Under the conventional definition used in wealth management, is she a high-net-worth individual?

Yes: her assets of two point six million dollars in total, home included, are well over the one million dollar level that the test sets

Yes: a primary residence counts toward the test once it is owned outright, free of any mortgage or other debt secured on the home

No: the test is one million dollars or more of investable assets, and the value of her primary residence is not counted toward it

No: the test is thirty million dollars or more of investable assets, and six hundred thousand dollars falls far short of that level

Compared with a client who is merely high-net-worth, what does wealth management typically add for an ultra-high-net-worth family?

Release from the fiduciary duty, since an adviser serving a family of that wealth may contract out of the duty by a written agreement with it

A simpler buy-and-hold portfolio of equity and bond funds, since a fortune of that size needs less active attention than a smaller one does

A move of the family's accounts to a broker-dealer, since the regulation of investment advisers stops applying above a set level of assets

Family governance and family office services that manage the family's finances as one economic unit, with management of concentrated stock positions

Most of a client's wealth is tied up in the private manufacturing company she founded, and she expects to step back from running it within ten years. Which wealth management service is distinctive to a client in her position?

Business succession and exit planning, including a tax-efficient transition of the company's ownership to its next owners

Retirement income planning for her personal savings only, leaving the company out of the plan as a business asset rather than her own

Annual rebalancing of her company stake against her target allocation, trimming it each year by selling shares on a stock exchange

Concentrating her personal portfolio in her company's industry as well, since a founder's knowledge of that sector gives her an edge there

A wealth manager runs a high-net-worth client's equity holdings with customised factor tilts and a tax-loss harvesting programme rather than through a standard fund. What is that customisation designed to optimise?

The pre-tax return of her equity portfolio against a broad index, whatever her own tax position

The after-tax return of her equity portfolio, given her own tax bracket and circumstances

The dividend income her portfolio pays out, so that she receives the most cash each quarter

The volatility of her equity portfolio, holding it at the lowest level any stock portfolio can reach

How do high-net-worth wealth management clients gain access to private equity and private credit investments that ordinary retail investors cannot buy?

Through margin accounts at a broker-dealer, whose borrowing power lets a client buy private positions a cash account cannot

Through a waiver that FINRA grants to advisory clients, which opens private funds that are otherwise closed to retail investors

Through investment structures open to investors who qualify as accredited investors or as qualified purchasers

Through tax-deferred retirement accounts, the one type of account in which private equity and private credit may be held

A wealth manager builds portfolios for two clients whose stated investment preferences are identical. One is in the highest tax bracket and holds a large business interest outside the portfolio; the other has neither. Why may their allocations still differ?

Because the fiduciary duty bars an adviser from giving two clients the same allocation, whatever their circumstances turn out to be

They should not: clients whose stated preferences match must receive identical allocations, so that neither is treated less favourably

Because allocations are set from each client's age band, and two clients with matching preferences still fall in different bands

Because each allocation reflects that client's tax circumstances and her whole financial situation as the relationship reveals them

A wealth management client's financial plan calls for her to take a large sum out of her portfolio in eighteen months to buy a house. How should that planning goal show up in the investment policy statement governing her portfolio?

In its liquidity provisions, which should provide for the cash the plan needs on that date, as the statement serves the plan's objectives

Nowhere, since the statement governs long-term investing and leaves spending goals like a house purchase to be handled outside it

In its benchmark, which should become a cash index for the whole portfolio until the house purchase has been completed

In a higher return requirement, so that the portfolio earns the sum for the house by that date without any holdings being sold

A wealth manager's retirement planning for a client begins from the lifestyle the client wants to have in retirement. What does that planning do with it?

Sets a savings rate as a fixed share of income, then lets the lifestyle follow from whatever that rate happens to build up

Projects the assets needed to fund that lifestyle, then develops the savings and investment strategy to accumulate them

Projects what the client's current portfolio can fund with nothing added, then asks her to scale the lifestyle down to fit it

Applies a standard withdrawal percentage to her current portfolio and calls the income that results the retirement lifestyle she can have

A client has an investment portfolio, income from her business, a cash reserve and an inheritance due next year, and her most important goals are her children's education and retiring at sixty. How does goal-based planning treat those resources?

It plans the portfolio alone, since business income, cash reserves and inheritances fall outside a wealth manager's planning

It ties each resource to one goal for good, so the portfolio funds retirement and the inheritance funds education whatever happens

It coordinates all of them toward those two objectives, rather than planning each of the resources on its own

It leaves the inheritance out until it arrives, since a resource not yet received cannot be counted toward any of her goals

A client asks her wealth manager to sell a fund that has fallen in value inside her tax-deferred IRA, to offset capital gains she has realised this year in her taxable account. How does tax-loss harvesting bear on the request?

It helps later: the IRA loss is carried forward and offsets her taxable gains in the year she withdraws the money from the IRA

It helps in full: a capital loss realised in any of her accounts offsets the capital gains she has realised in any other that year

It helps in part: a loss realised inside an IRA offsets half its amount of the gains realised in a taxable account in that year

It does not help here: harvesting realises losses in taxable accounts, and a loss inside the IRA offsets none of her taxable gains

Two clients hold comparable portfolios that earn the same pre-tax return. One is in the highest federal tax bracket and the other is in a low bracket. Why does tax management weigh more heavily in the wealth manager's work for the first client?

Her high marginal rates make tax management a primary determinant of how much wealth she accumulates after tax over the years

Tax law bars a client in a low bracket from using tax-efficient strategies, so only the first client has anything to gain from tax management

The first client's investment income is taxed at one flat rate however it arises, so her manager's only task is to postpone the bills

The first client's tax is paid by the firm out of its advisory fee, so the firm bears the cost of any tax that goes unmanaged

A client in the highest federal tax bracket asks why her wealth manager gives municipal bonds a place in her fixed income allocation beside Treasury and corporate bonds. What makes municipal bonds particularly valuable to a client like her?

Their principal is backed by the federal government, which makes them safer than the Treasury bonds that sit in the same allocation

Their interest is excluded from federal income tax under IRC Section 103, an exemption worth more the higher the client's bracket is

Their interest is taxed at the lower capital gains rates, which a client in the highest bracket pays on all of her bond income

Their yields are always higher than Treasury yields, so a client in the highest bracket earns more on them before any tax is counted

Two wealth management clients' estates are projected at death: one well below the federal applicable exclusion amount, the other many times above it. How does the federal estate tax bear on their estate planning?

It weighs equally on both estates, since the tax applies to every estate at one rate from the first dollar, whatever the estate's size

It weighs more on the smaller estate, since the exclusion amount is withdrawn from any estate that falls below a minimum size

It weighs heavily on the larger estate alone, since the tax applies to estates that exceed the applicable exclusion amount

It weighs on the larger estate only if the client dies before retiring, since estates of retired clients fall within the exclusion

A widowed client with a large estate tells her wealth manager that she wants her children to receive her assets promptly after her death and without the details becoming public. How does estate planning address those wishes?

By moving her portfolio into Treasury bonds, whose federal backing lets them pass to heirs free of probate and without any public record of the transfer

By managing the portfolio more aggressively, since a larger inheritance can offset any delay or publicity attached to the way it is passed on

By buying more life insurance, since a death benefit is paid out only once the estate has cleared probate, and so becomes public along with the estate

By structuring her assets and ownership arrangements so that they pass to her children efficiently, avoiding probate delays and keeping the family's affairs private

A wealthy client already carries homeowners and automobile insurance at standard limits. What does adding umbrella liability coverage do for her?

It protects her accumulated assets from a legal judgment that exceeds the limits of her homeowners and automobile policies

It replaces her homeowners and automobile policies with one cheaper policy that covers the same property against the same risks

It pays for damage to her own home and cars above their insured value, once the standard policies' own limits are used up

It insures her investment portfolio against market losses above a set amount, once her standard policies have paid a claim

A client in her forties has two young children who depend on her earnings. Which function of life insurance addresses the risk of her premature death for her surviving family?

Portfolio protection, which guarantees that the value of her investments cannot fall below its present level while her children are young

Income replacement, which gives her surviving family the funds to replace the earnings that her death takes away from them

Premium relief, which lowers the cost of her homeowners and automobile cover when she also holds a life policy with the same insurer

Care funding, which pays for her own long-term care in later life out of a death benefit that is released while she is still living

A wealth manager's risk management for a client first identifies the exposures that could impair her financial security, such as premature death and extended care needs. What does it then do about those exposures?

It drafts the trust documents that remove her assets from her taxable estate, since an insurance policy cannot reach the exposures

It sets her investment objective and risk tolerance, which the portfolio is then constructed to meet so that the exposures are covered

It chooses the tax-deferred accounts in which her income will be sheltered, since tax deferral protects her against the exposures

A client pays her wealth manager an annual percentage of the assets under management. She has a large cash surplus in her portfolio and an expensive loan outstanding. Where does that fee put the adviser's interest at odds with hers?

In choosing between growth and income funds, since the fee is charged on the income the portfolio receives rather than on the assets held

Nowhere, since a fee charged as a percentage of assets aligns the adviser's revenue with the client's wealth in every decision they face

In rebalancing the portfolio, since each sale made to restore the portfolio's target mix earns the adviser a separate commission on top

In advising whether to use the cash to pay off the loan, which would shrink the assets on which the adviser's fee is charged

A wealth management firm moves a client from a fee charged as a percentage of her assets to a fixed annual retainer for a defined scope of services. What happens to the adviser's incentives?

The link between her revenue and the client's asset level goes, but how the scope of services is defined can create incentives of its own

Every conflict of interest goes with it, since a fee that does not vary with the client's assets leaves the adviser with no incentive of any kind

Nothing changes, since a retainer is typically still worked out from the assets under management and is merely billed to the client as one figure

Her incentive turns toward recommending more products, since a retainer is paid by the product sponsors rather than by the client herself

A client wants a wealth manager to review her retirement plan once and make recommendations, with no ongoing relationship and no management of her assets. Which fee model is most common for an engagement like this?

An asset-based fee charged on her portfolio's value, the model most common for one-off reviews of a plan

An hourly fee charged for the actual time spent on her affairs, the model most common for project-based work

A wrap fee charged on her account each year, the model built for engagements in which nothing is traded

A retainer set at a fixed annual amount, the model built for engagements that last for a single meeting

A state-registered wealth management firm grows to one hundred and fifty million dollars in regulatory assets under management. Where does it register, and what comes with that registration?

With its state for three more years, the SEC taking over its registration only after its assets have stayed above the threshold that long

With its state still, since a firm registered with a state stays there whatever its assets and an SEC filing is voluntary for it

With the SEC, which brings SEC examination, the Form ADV disclosure requirements and the compliance rule under Rule 206(4)-7

With the SEC, which brings SEC examination but frees the firm from Form ADV, a filing that only state-registered firms make

What does Form ADV Part 2B, the brochure supplement, give a wealth management client that the firm-level disclosure in its brochure does not?

The firm's audited financial statements, from which she can judge whether it is able to meet its obligations to her

A list of the firm's other clients and the results of their accounts, which the brochure leaves out of its own disclosure

A projection of the returns her portfolio is expected to earn under the firm's strategy over the coming five years

Disclosure about the individual who will advise her: education, credentials, disciplinary history and outside business activities

A retail client opens an advisory account with a wealth management firm and, separately, a brokerage account with a broker-dealer. Which of the two firms must provide her with Form CRS, the Customer Relationship Summary?

Both firms, each describing in standardised language the relationship it offers, its services, its fees and its standard of conduct

The broker-dealer alone, since the form exists to explain brokerage accounts and an adviser's brochure already covers the same ground

The wealth management firm alone, since the form summarises an advisory relationship and brokerage accounts have trade confirmations

Whichever firm she opens her account with first, the other being relieved of the duty once she holds a summary from one of them

A financial planner, for a fee, recommends the specific investments that each client should use. How is she regulated?

As a broker-dealer agent registered with FINRA, because the advice names specific securities for each client to buy

As an investment adviser owing the full fiduciary duty, because she gives investment advice for compensation

Outside the adviser framework, because advice given in the course of planning is incidental to that work

By her planning designation's ethics code alone, because a professional credential sets its own conduct rules for the advice she gives

A broker-dealer registered representative executes securities transactions for a retail customer and, as part of that business, recommends which securities to buy. Which conduct standard governs those recommendations?

No conduct standard beyond disclosure of her commissions, since advice incidental to trading is unregulated

The full fiduciary duty of the Advisers Act, since any recommendation of a security makes her an adviser

Regulation Best Interest, rather than the full fiduciary duty that applies to investment advisers

The adviser's fiduciary duty for her first recommendation, then Regulation Best Interest for the rest

A client who wants a written plan for her retirement, her children's education and her insurance needs says she will go on managing her own investments. Can a financial planner serve her in the way a planner typically does?

No: a planner can serve only clients whose investments she manages, because the plan is built from the holdings in the client's own accounts

Yes, but only if the planner takes over her investments within the year, because a plan must be carried out by the professional who wrote it

No: a planner is typically engaged to manage portfolios, and the plans for retirement, education and insurance are written by other professionals

Yes: a planner develops comprehensive plans for goals such as retirement, education funding and insurance, and may or may not also provide ongoing investment management

Wealth Manager: Services, Fees and Fiduciary Duty

What Is a Wealth Manager?

A wealth manager is a financial professional — typically a registered investment adviser or an investment adviser representative operating within a registered investment advisory firm — who provides comprehensive, integrated financial services to affluent, high-net-worth, and ultra-high-net-worth individuals and families, combining investment management, financial planning, tax strategy, estate planning, risk management, and often philanthropic and multigenerational planning into a single coordinated advisory relationship that addresses every dimension of the client’s financial life rather than any single component in isolation.

The defining characteristic of wealth management that distinguishes it from standard investment advisory services is its holistic scope — a wealth manager acts as the primary financial coordinator for the client, integrating expertise across investment portfolio construction, income tax planning, estate and trust planning, insurance and risk management, retirement planning, and business succession planning into a coherent strategy in which every financial decision reflects its interaction with all others.

Wealth managers are almost universally registered investment advisers subject to the fiduciary duty of the Investment Advisers Act of 1940 — required to act in the client’s best interest at all times, to disclose all material conflicts of interest, and to provide advice tailored to the client’s specific and often complex individual circumstances.

Who Wealth Managers Serve — The Client Profile

Wealth managers primarily serve three tiers of affluent clients whose financial complexity justifies and requires the comprehensive coordinated service model that wealth management provides.

High-net-worth individuals — conventionally defined as those with investable assets of one million dollars or more, excluding the value of a primary residence — represent the primary client base of most wealth management practices. At this asset level clients face meaningful tax planning complexity, meaningful estate planning considerations, and investment needs that go beyond the simple buy-and-hold equity and bond portfolios appropriate for clients of more modest means.

Ultra-high-net-worth individuals — conventionally defined as those with investable assets of thirty million dollars or more — require the most sophisticated wealth management services, including access to alternative investments such as private equity and hedge funds that are unavailable to less wealthy investors, complex multi-jurisdictional tax and estate planning, concentrated stock position management, family governance frameworks, and in many cases the full suite of family office services that provide institutional-grade financial management for the family as an economic unit.

Business owners represent a distinct high-complexity client category within wealth management — combining the personal financial planning needs of high-net-worth individuals with the business advisory needs of an entrepreneur whose personal wealth is heavily concentrated in a private business. Business succession planning, exit strategy development, and the tax-efficient transition of business ownership are distinctive wealth management services that require specialised expertise beyond conventional investment and financial planning.

The Core Services of Wealth Management

The wealth management service model integrates multiple financial disciplines that would otherwise be provided by separate specialists — with the wealth manager serving as the coordinating professional who ensures that each component of the client’s financial life is consistent with and complementary to all others.

Investment Management

Portfolio management is the foundational service of wealth management — building and managing a diversified investment portfolio aligned with the client’s investment objective, risk tolerance, time horizon, and tax circumstances. Wealth managers construct portfolios spanning domestic equities, international equities, fixed income instruments including treasury bonds, corporate bonds, and municipal bonds, and alternative investments — with the specific allocation reflecting the comprehensive understanding of the client’s overall financial situation that the wealth management relationship provides.

High-net-worth clients often have access to investment strategies unavailable to retail investors — including separately managed accounts in which the client directly owns the individual securities rather than holding fund shares, access to private equity and private credit through qualified purchaser and accredited investor structures, and customised factor tilts and tax-loss harvesting programmes that optimise the after-tax return of the equity portfolio for the client’s specific tax bracket and circumstances.

Financial Planning

Comprehensive financial planning in the wealth management context encompasses retirement planning — projecting the assets required to fund the client’s desired retirement lifestyle and developing the savings and investment strategy to accumulate those assets — education funding planning, cash flow management, debt strategy, and goal-based planning that coordinates all financial resources toward the client’s most important life objectives.

The investment policy statement that governs the investment portfolio is developed within the broader financial planning framework — ensuring that the portfolio’s return requirement, risk budget, and liquidity provisions reflect the specific financial planning objectives the portfolio is designed to support.

Tax Planning and Tax-Efficient Investing

Tax planning is one of the most valuable and most differentiating services that wealth managers provide to high-net-worth clients — whose complex tax situations and high marginal tax rates make sophisticated tax management a primary determinant of after-tax wealth accumulation.

Asset location — the strategic placement of different asset classes across taxable accounts, tax-deferred retirement accounts, and tax-exempt Roth accounts — is a fundamental wealth management tax strategy. High-income-generating assets such as taxable bonds and real estate investment trusts are held in tax-deferred accounts where their income accrues without current tax liability. Tax-efficient assets such as index equity funds and tax-exempt municipal bonds are held in taxable accounts where their limited distributions minimise current tax drag.

Tax-loss harvesting — the deliberate realisation of capital losses in taxable accounts to offset capital gains and reduce current tax liability — is a systematic wealth management service that can add meaningful after-tax value for clients with large taxable portfolios subject to substantial capital gains exposure.

For clients in the highest tax bracket the tax-exempt status of municipal bond interest under IRC Section 103 makes municipal bonds particularly valuable components of the fixed income allocation — with the tax-equivalent yield calculation converting the municipal bond’s tax-exempt yield into its taxable equivalent for direct comparison with taxable treasury bonds and corporate bonds.

Estate Planning and Wealth Transfer

Estate planning is the process of structuring the client’s assets and ownership arrangements to ensure that wealth passes to intended beneficiaries efficiently — minimising estate taxes, avoiding probate delays, and maintaining the family’s financial privacy — in accordance with the client’s wishes and family values.

Wealth managers coordinate with estate planning attorneys to implement trust structures — including revocable living trusts, irrevocable life insurance trusts, charitable remainder trusts, and grantor retained annuity trusts — that achieve the client’s estate planning objectives within the legal framework governing wealth transfer.

The federal estate tax — applicable to estates exceeding the applicable exclusion amount — is a primary planning consideration for ultra-high-net-worth clients whose estates may face substantial tax at death without effective planning. Annual gifting strategies, use of the lifetime gift tax exclusion, and various trust structures can substantially reduce the estate tax exposure of large estates — preserving more wealth for the next generation rather than for federal and state tax authorities.

Risk Management and Insurance

Risk management in the wealth management context encompasses identifying and quantifying the risks that could impair the client’s financial security or estate plan — including premature death, disability, property damage, liability exposure, and long-term care needs — and developing insurance and other risk transfer strategies to manage those risks efficiently.

Life insurance serves multiple wealth management functions — providing income replacement for surviving family members, funding estate tax liabilities without requiring the forced sale of assets, and in certain structures serving as a tax-advantaged investment vehicle. Disability income insurance protects the client’s earned income — the primary source of wealth accumulation for most high-net-worth individuals who are still in their working years. Liability insurance including umbrella coverage protects the client’s accumulated assets from claims arising from accidents, professional liability, and other events that can result in legal judgments exceeding the limits of standard property and auto coverage.

How Wealth Managers Are Compensated

Wealth managers are compensated through several fee structures that have different implications for the alignment of the adviser’s financial interests with the client’s — a consideration directly relevant to the fiduciary duty analysis that is extensively tested on the Series 65 examination.

The asset-based fee — also called the assets under management fee or AUM fee — is the most common wealth management compensation structure, charging a percentage of the market value of assets under management annually. Typical AUM fees range from fifty basis points to one and a half percent annually depending on the total asset level — with breakpoint schedules reducing the percentage fee for larger asset levels. The asset-based fee aligns the adviser’s revenue with the client’s wealth — the adviser earns more when the client’s portfolio grows — but creates a potential conflict of interest when the adviser must choose between recommending strategies that increase assets under management and strategies that serve the client’s overall best interests, such as using excess liquidity to pay down debt rather than invest it.

The flat fee or retainer model charges a fixed annual fee for a defined scope of wealth management services regardless of the asset level. The flat fee eliminates the asset-based fee’s potential conflict between the adviser’s revenue and the client’s interest in deploying capital efficiently — but may create different incentive structures depending on how the scope of services is defined.

The hourly fee model charges for actual time spent on the client’s financial affairs — most common for project-based engagements rather than ongoing comprehensive wealth management relationships.

The wrap account structure — described in detail in the Wrap Account entry of this dictionary — bundles investment advisory services, portfolio management, brokerage execution, and administrative services into a single all-inclusive asset-based fee rather than charging separately for each component. Wrap accounts are a common delivery mechanism for wealth management services, providing clients with a transparent all-in cost and eliminating the potential conflict of interest that transaction-based compensation creates by incentivising unnecessary trading.

Fee-only wealth managers — who accept compensation exclusively from clients and receive no commissions or third-party payments — are considered the most conflict-free compensation structure under the fiduciary framework because the adviser’s financial interests are aligned entirely with the client’s rather than influenced by product-specific compensation.

Regulatory Framework — The Wealth Manager as Registered Investment Adviser

Wealth managers providing investment advice for compensation are investment advisers under Section 202(a)(11) of the Investment Advisers Act of 1940 and are subject to the comprehensive regulatory framework of that Act.

Wealth management firms with one hundred million dollars or more in regulatory assets under management register with the Securities and Exchange Commission as federally registered investment advisers — subject to SEC examination, the Form ADV disclosure requirements, the compliance rule under Rule 206(4)-7, and the comprehensive fiduciary duty derived from Section 206 of the Investment Advisers Act. Wealth management firms below the federal registration threshold register with state securities regulators under the framework established by the Uniform Securities Act and administered by NASAA member state securities administrators.

Individual wealth managers providing services to clients must register as investment adviser representatives in each state where they conduct advisory business — typically requiring passage of the Series 65 examination or the Series 66 examination as the primary qualification for investment adviser representative registration under state law.

The Form ADV that registered wealth management firms must file with the SEC and deliver to clients discloses all material information about the firm’s services, fee schedules, investment strategies, conflicts of interest, disciplinary history, and the qualifications of individual investment adviser representatives. Form ADV Part 2B — the brochure supplement — provides client-specific disclosure about the individual wealth manager who will be providing the advisory services, including their educational background, professional credentials, and any disciplinary history or outside business activities that might create conflicts of interest.

The Form CRS — the Customer Relationship Summary required under Regulation Best Interest — must be provided to retail clients by both wealth management firms and broker-dealers before or at the time of entering a new relationship, disclosing in standardised language the type of relationship offered, the services provided, the fees charged, and the legal standard of conduct applicable to the relationship — helping retail clients understand the differences between the fiduciary wealth management relationship and the Regulation Best Interest broker-dealer relationship.

Wealth Manager Versus Financial Planner Versus Broker-Dealer

The distinction between a wealth manager, a financial planner, and a broker-dealer registered representative is practically important for clients selecting a financial professional and is directly tested on the Series 65 examination.

A wealth manager is a comprehensive service provider operating under a fiduciary standard — providing integrated investment management, financial planning, tax strategy, estate planning, and risk management as a coordinated whole for affluent clients with complex financial situations. The wealth management relationship is ongoing and comprehensive — the wealth manager has an affirmative obligation to monitor the client’s entire financial situation and recommend adjustments as circumstances change.

A financial planner provides financial planning services — developing comprehensive financial plans addressing retirement, education funding, insurance, and other financial goals — but may or may not also provide ongoing investment management. Financial planners who provide investment advice for compensation are investment advisers subject to the same fiduciary duty as wealth managers.

A broker-dealer registered representative provides securities transaction execution services and may provide incidental investment advice — subject to the Regulation Best Interest standard rather than the full fiduciary duty applicable to investment advisers. The broker-dealer relationship is transaction-based rather than ongoing — the registered representative’s conduct obligations are triggered at the point of a specific recommendation rather than continuously throughout the relationship.

Examination Relevance and Key Takeaways

Wealth manager is tested on the Series 65 examination in the context of investment adviser regulation, the fiduciary duty framework, compensation structures, the distinction between wealth management and broker-dealer relationships, and the regulatory requirements applicable to investment adviser representatives.

The key points to retain are these.

A wealth manager is a financial professional — typically a registered investment adviser or investment adviser representative — providing comprehensive integrated financial services to affluent clients combining investment portfolio management, financial planning, tax strategy, estate planning, and risk management in a single coordinated relationship. Wealth managers are subject to the fiduciary duty of the Investment Advisers Act of 1940 — requiring them to act in the client’s best interest at all times, to disclose all material conflicts of interest, and to provide advice tailored to each client’s specific and complex individual circumstances.

Wealth management firms with one hundred million dollars or more in regulatory assets under management register with the Securities and Exchange Commission as federally registered investment advisers — filing Form ADV and delivering the brochure to clients. Smaller firms register with state securities regulators under the Uniform Securities Act framework. Individual wealth managers register as investment adviser representatives in each state where they conduct advisory business — typically requiring passage of the Series 65 or Series 66 examination.

The primary wealth management compensation structures are the asset-based AUM fee — the most common approach, charging a percentage of assets under management annually — the flat retainer fee, the hourly fee for project engagements, and the wrap account structure that bundles advisory, execution, and administrative services into a single all-inclusive fee. Fee-only compensation — accepting payment exclusively from clients with no third-party commissions — is considered the most conflict-free structure under the fiduciary framework. The critical distinction from broker-dealer relationships is that the wealth manager’s fiduciary duty is continuous throughout the advisory relationship while the broker-dealer’s Regulation Best Interest obligation is triggered at the point of each specific recommendation.