Like being fitted for clothing, a good wealth manager takes into account your goals and financial situation to create a customized game plan that fits. They are experts at handling situations people who oversee millions in assets are likely to face daily.
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As you begin, your salary (known as a grid payout) may initially be relatively modest, though that should quickly increase as you hit revenue targets.
How much do wealth managers make?
As with any profession, wealth managers' earnings depend on a range of variables. Their income will largely be determined by industry, region and the amount of grid payout from their firm (client money they control).
Wealth management firms will typically offer you a salary to assist in starting and reaching sales targets, especially larger firms that work closely with investment banks. Their business models require specific amounts to come in to break even.
Once you've survived the initial onboarding period, many wealth management positions will gradually reduce your salary to zero and offer compensation based on commissions from assets under your management. Furthermore, many wealth managers opt to go independent by starting their own shop once they've gained enough expertise in the field and developed strong relationships with potential clients.
How much do they get paid?
As a wealth manager, your initial salary will depend on what percentage of assets under management (called AUM ) your clients entrust you with (known as grid payout). Over time this percentage should increase as you prove yourself valuable to your firm and become more senior.
As well as managing investment portfolios, you'll also assist clients with other financial-related matters affecting different parts of their lives – tax planning, charitable giving and estate planning may all fall within this realm. Working closely with other members of your team and offering exceptional client service are paramount priorities here.
To secure an internship or entry-level position at a wealth management company, an undergraduate degree relevant to the industry and strong knowledge of finance are both key requirements. Finance, business or economics degrees could prove beneficial; as you gain experience you could progress further into becoming a relationship manager.
How do they get paid?
Wealth managers operate under various models, but typically start out on a salary and commission model. This means they receive a base level of pay determined by how much assets are under their control, but also earn extra money with every client they service thanks to commissions on products or services sold.
Start out in ultra-high net worth households (UHNW; or households worth $10 million or more in net assets), who often need complex planning for estate taxes, income taxes, family trusts and donor advised funds in addition to investment management.
As your experience as a wealth manager increases, it is common for your salary to gradually be reduced until all of your compensation comes from commission based on how much AUM (assets under management) that you control or assist managing for more senior wealth managers at your firm or department at a bank. This model is known as grid payout model and it's common in the industry for top wealth managers to negotiate grid payouts of 50-60%.
How do they get clients?
Wealth managers typically secure clients through referrals from existing ones; more experienced managers often possess excellent marketing techniques which enable them to bring new ones on board on their own.
Investopedia suggests that individuals interested in entering this career path be outgoing and adept at networking as this will be essential to succeeding in this role. A bachelor's degree is generally the minimum educational requirement; professional certifications like CFP or Chartered Wealth Manager could be particularly advantageous.
As you begin working as a wealth manager, your salary should provide enough financial security for the initial stages. Once your gross revenue from clients that you manage reaches a specific threshold, the firm may switch you from salary payments to grid payouts; typically a percentage of total assets under management (AUM). Depending on its size and whether it belongs to a larger investment bank or not, this percentage can reach as high as 40%.
