How Does a Wealth Management Account Work?

By Samuel Becker · December 13, 2023 · 4 minute read

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How Does a Wealth Management Account Work?

Wealth management accounts are types of investment accounts that are managed by a professional, who coordinates the rebalancing and reallocation of assets in a portfolio. They are usually a part of a larger financial plan, often overseen by a manager or advisor.

A wealth management account is one way to help simplify investing and financial planning. But there are things investors should know, such as the costs involved, and any potential pitfalls.

What Is A Wealth Management Account?

A wealth management account is generally a form of advisory account that allows for the input and coordination of a financial advisor or planner. While there are many different types of asset management accounts, historically, many of these accounts have been available only to those with significant wealth or assets to manage.

If you’ve avoided opening a wealth management account because of high investing minimums, you should know that there are an increasing number of types of investing accounts on the market for individuals of various income levels. That’s to say that though there may be investment fees in the mix, it may be worth it to discuss the options available to you with a financial professional.

Based on your personal investment strategy, which may be developed with the help of a professional, a wealth management account may be used to invest your money in different assets.

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Why Invest with a Wealth Management Account?

Using a wealth management account may help some investors stay on track and stick to a financial plan. Working with a manager, too, can help take some of the pressure off of investors who may be having difficulties deciding how to invest.

Some people may choose not to invest at all, which might stymie their progress toward reaching financial goals. As such, a wealth manager or advisor may use a wealth management account to help those investors, and invest their assets where they have the best opportunity to grow. While rates of return cannot be guaranteed, and it is possible that investments will lose money, over time, money tends to grow when left in the market.

In effect, investing is a way to allow your money to work for you.

How Does Investing with a Wealth Management Account Work?

As noted, a wealth management account works in conjunction with a larger financial plan – one that a wealth management or financial professional likely lays out with you after learning more about your goals. They’re holistic accounts, taking into account applicable taxes and fees, and one in which a manager or advisor selects and manages investments on an individual’s behalf.

Once you have an investment plan in place, a wealth manager could build you a portfolio from a wide selection of assets, such as stocks, bonds, ETFs, and more. From there, a wealth manager will keep an eye on your portfolio, make changes as necessary, and incorporate an investor’s feedback.

How Do Financial Planners Help with Wealth Management Accounts?

As discussed, financial professionals or wealth managers offer a guiding hand in not only determining your financial goals, but figuring out the best investment strategy to help you reach them. That will all depend on a number of factors, including your age, risk tolerance, and more. But, ultimately, a financial professional will be able to make decisions based on market conditions and your portfolio’s makeup to help you reach certain financial milestones.

There’s always a chance that they could fail, that they offer bad advice, that your portfolio loses money, or that you could end up paying more than anticipated in fees and commissions, however. That’s something investors will need to take into consideration. But overall, a wealth management account is typically designed for an investor who wants a professional to offer guidance, and take some of the work out of managing a portfolio.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

For a limited time, opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.


Are wealth management accounts worth it?

A wealth management account may be worth it to an investor if the investor wants a professional to offer guidance and make actual investments for them, as opposed to doing it themselves. Whether it’s worth it is ultimately up to the individual.

How much money do you need to open a wealth management account?

The amount of money needed to open a wealth management account varies from firm to firm, but generally, investors will need a minimum of around $25,000 to get started.

What is the typical wealth management fee?

Depending on the specific firm and financial professional an investor is working with, wealth management fees average around 1% of the assets being managed.

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