Wealth Management

Wealth Management


With many of the old boundaries between banking, brokerage, and insurance crumbling, today’s financial services companies, whatever form they take, all must provide component products from each of the major industry areas. Banks offer insurance products, such as annuities and life insurance, while brokerage firms offer bank products, like checking accounts and mortgages, for example. This is especially true in private wealth management, where a variety of services from banking, brokerage, and insurance can be marketed to the same client.


Regional banks offering investment services through their own broker/dealer probably also have some type of private wealth management services, if only through their banks’ trust departments. The quality of services and depth of knowledge may vary, however, amongst the smaller banks. Even savings and loans firms provide some trust and estate services, which are key components of private wealth management.

Banks sell a multitude of products, often providing captive or proprietary services for their clients, as well as general services. These are special product offerings packaged by the bank, and are only made available to clients of that bank. Such services might include a portfolio manager, who only manages money for clients of the bank. This has been a great advantage for banks in that clients will be less likely to move to another firm, especially if they value the services of a portfolio manager doing a good job.

In general, of the various industry roles, banks pay the lowest commission rates to their private wealth managers, because many of their private wealth management clients may already be clients of the bank, doing business in other areas such as commercial banking or mortgages, and not because banks are stingy by nature. Clients may also do business with the bank because it has a good reputation and well-known name. A client might, for example, be persuaded that Merrill (A Bank of America company) is the place to do business because of the 692 commercials they see about it every day. The banks’ ability to attract clients will greatly aid a private wealth manager. Though they might be paid lower commission rates, it doesn’t mean they will make less money. The best private wealth managers tend to make about the same amount of money no matter which company they work for.


“Wirehouse” is an industry term for a large national broker/dealer. Goldman Sachs, BofA Securities, Edward Jones, Wells Fargo Advisors, UBS Wealth Management, and Morgan Stanley Wealth Management, are all examples of wirehouses that also provide private wealth management services. (The lines have blurred between banks, wirehouses, and other wealth management providers, so a company such as Wells Fargo Advisors could fall into both categories because it has a large bank (Wells Fargo) and a wirehouse. Wirehouses usually provide as many services as large money center banks when it comes to private wealth management. Like the banks, they also provide a number of proprietary or captive services, such as private portfolio managers and specialized private equity, which can boost client retention. Be warned, however, that proprietary services also have the drawback of not letting a private wealth manager move easily from one firm to another (with their clients, at least), hence the name captive services. Wirehouses, just like money center banks, also attract more clients because of the perceived prestige of their names and reputations. This won’t make finding clients easy, but it can help. A funny thing about money is that when clients turn a lot of it over to a manager, they want to know that the firm will still be there the next day. With a wirehouse, clients often get the comfort they seek from a known name.

The emphasis on investment is what differentiates wirehouses from banks, as they typically offer a broader array of investment options. Although this focus is disappearing as banks continue to buy brokerage firms, banks still tend to rely more on captive, in-house products than a broader set of investment products found in a wirehouse.

Regional and Boutiques

Janney Montgomery Scott, Ameriprise Financial, and Raymond James are all examples of regional firms that offer private wealth management services. Though not as well known outside the industry, these firms provide an array of products and services with a small firm focus on personal service. They also offer some proprietary or captive products, but generally allow their reps the freedom to sell products off their wholesale list without incentives to move proprietary products. Regional firms offer a slightly higher payout (approximately 10 to 15 percent higher) to wealth managers in most instances than banks or wirehouses, but working to land clients will be a little harder at a regional firm than at a better-known bank or brokerage firm.

Boutique firms are much smaller in size than the regionals and will usually have less than 100 reps. Not all boutiques offer private wealth management services, and whether or not they do depends primarily on what types of products they emphasize. A small firm that specializes in smaller stocks will probably not have a very accomplished wealth management department.

Family Offices

Family offices are firms that manage investments, assets, and trusts for a single high-wealth family with assets that typically exceed $25 million; multi-family offices provide services to two or more high-wealth families. Family offices typically oversee a high-wealth family’s entire universe—from investment management and tax and estate planning, to philanthropy, to basic bill-paying.


A growing number of private wealth managers are choosing to open private practices with independent contractor and insurance company broker/dealers providing regulatory, product, and compliance support. They also offer much higher payouts than the other types of firms—often twice as high. But these firms do not offer brick and mortar locations and other things like telephone systems, computers, etc. These necessities must be paid for out of the rep’s own pocket. They also don’t offer in-depth and in-house expertise in trusts, estates, tax, and asset management like the regional firms, wirehouses, and banks. However, private wealth managers working with an independent broker/dealer are free to hire their own experts and develop their own practice in a manner that best suits them and their clients. One caution: this is an option that should be reserved for only the most entrepreneurial of people. Especially at the beginning of your career, when the learning curve looks like the crux of a hockey stick, it’s important to have the support of those who have experience in the business.

Robo Advisory Firms

Robo advisory firms market algorithm-driven financial portfolio management software to investors that allow them to invest with minimal human interaction. Most robo advisors are limited to portfolio management functions, and don’t provide services such as estate, retirement, and tax planning. Major robo advisor firms include Betterment, Wealthfront, Personal Capital, bloom, and Acorns. Some traditional wealth management firms, such as Charles Schwab, have launched their own robo advisors, and others (such as Fidelity) are using software developed by robo advisory firms in their own operations.