Table of Contents
Money managers can help individuals set financial goals, determine and implement investment strategies, and more. Overall, they typically provide their clients with personalized investment services.
Before hiring a money manager, it’s important to understand what they do, how they get paid, and how they may differ from other financial professionals.
Key Points
• Money managers typically give personalized investment advice and manage portfolios, buying and selling securities based on market conditions.
• They have a fiduciary duty to act in clients’ best interests, providing accurate and beneficial advice.
• Potential benefits include expert guidance, time savings and convenience, and personalized advice.
• Drawbacks include fees and the cost of services, which can range from 0.5% to 2% of the portfolio.
• Fee structures vary, including management fees, hourly rates, fixed fees, and performance-based fees.
What Is a Money Manager?
Money managers are also known as portfolio, asset, or investment managers. They are people or companies that provide individualized advice about building a portfolio. They typically buy and sell securities on behalf of their clients, provide updates, and make suggestions for changes as market conditions shift. Clients may include individuals and institutional investors like large companies and universities.
Money managers have a fiduciary duty to their clients. That means they are legally obligated by law to put their clients’ best interests first. The investment advice a money manager gives must advance a client’s goals.
Fiduciary rules mean that advice must be as accurate as possible based on the information that is available. A financial fiduciary needs to take into account cost and efficiency when making investments on behalf of clients, and alert clients to any potential conflicts of interest.
What Makes Money Managers Different?
Individuals searching for a professional to help them with investing may encounter any number of titles besides money manager, including financial advisor, wealth manager, and registered investment advisor. Additionally, the term “financial planner” typically covers a broad range of possible professions. They could be investment advisors, brokers, insurance agents, or accountants.
A potential client can check the registration status and background of a professional or firm on Investor.gov, the Security and Exchange Commission’s (SEC’s) Investment Adviser Public Disclosure website, the Financial Industry Regulatory Authority’s (FINRA’s) BrokerCheck, and/or with individual state securities regulators.
Here’s a look at some of the most common financial professionals you might encounter and how money managers may be different.
Registered Investment Advisors
Registered investment advisors (RIAs) provide investment advice to clients. They must register with the SEC or a state authority, and they have a fiduciary duty to hold a client’s interests above their own. They can manage client portfolios, making trades and offering advice on investment strategies.
Registering as an investment advisor means disclosing investment styles and strategies, total assets under management, and fee structure. RIAs must also disclose past disciplinary action and conflicts of interest.
Broker-dealers
A broker-dealer is an individual or company licensed to buy and sell securities. Brokers typically act as middlemen, buying and selling stocks and other securities for other people. When they are buying for their own accounts they are functioning as dealers.
Stockbrokers usually work at brokerage firms and earn their money by charging a fee for transactions they make.
Brokers register with FINRA, an industry group. FINRA has enforced a “suitability” rule for them, meaning they are required to have reasonable grounds to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer.
The SEC enforces a rule called Regulation Best Interest that establishes a “best interest” standard for broker-dealers. It requires them to work in the best interest of their clients when making investment recommendations, and to stop referring to themselves as advisors if they aren’t working under a fiduciary standard.
Certified Financial Planners
Financial professionals who carry the CFP® credential have gone through the rigorous training and experience qualifications required by the CFP® board. They must also pass a six-hour exam.
They must act with a fiduciary duty to their clients and may make recommendations about asset allocation, investment accounts, and tax planning. They can also help with general financial planning, such as putting together a retirement plan or a debt reduction plan.
Money Managers
Money managers may offer a combination of the services mentioned above. Typically, they chiefly manage investment portfolios for clients, but they may also offer other forms of financial planning. They generally give investment advice, which means they must be registered as an RIA.
Here’s a look at how these common financial professionals compare.
| Fiduciary | Offer advice | Area of focus | |
|---|---|---|---|
| Money Managers | Yes | Yes | Portfolio management |
| Certified Financial Planners | Yes | Yes | Financial planning (retirement, investment, etc.) |
| Broker-dealers | Sometimes | Sometimes | Facilitating investment transactions |
| Registered Investment Advisors | Yes | Yes | Investment advice |
Pros and Cons of Hiring a Money Manager
HIring a money manager, like any other financial professional, can have its pros and cons.
Pros of Having a Money Manager
The potential advantages of having a money manager include:
• Knowledge and experience: Money managers typically stay up to date on market trends, financial regulations, and investment strategies.
• Gaining help making informed financial decisions: They can generally provide advice personalized to an individual’s specific circumstances and help them navigate complex financial situations.
• Convenience and time saving: Money managers typically take care of things like financial analysis, tax planning and portfolio rebalancing.
Cons of Having a Money Manager
There are also potential disadvantages of having a money manager, such as:
• Costs: Money managers charge fees (see more about this below) that can add up over time.
• Loss of control: Some individuals may be uncomfortable having someone else oversee and manage their investments.
• Quality and service: Finding the right money manager, with the kind of knowledge and investment approach an individual is looking for may be challenging. Not every money manager fits every client.
How Do Money Managers Get Paid?
Money managers typically charge a management fee equal to a percentage of a client’s portfolio each year. On average, advisors charge between 0.5% and 2% of clients’ assets under management. But there are a lot of variables to consider.
A manager’s fees may be assessed quarterly, which could mean the amount you pay at the end of the year may be a bit more or less than if you were to pay annually. An asset manager’s fees may also decrease depending on the size of an account. For example, fees on very large accounts may be smaller.
Asset managers and other financial advisors may also charge an hourly rate, especially if they are doing any consulting or working on a special project. They may also charge fixed fees for certain services. Some advisors and managers may earn a commission when purchases or trades are made. And there may be performance-based fees if a portfolio performs beyond an established benchmark.
Fee-only advisors earn their money only from the fees they charge clients. They do not earn commissions. This fact makes them distinct from fee-based advisors, who may earn money from fees and commissions.
Should You Hire a Money Manager?
Managing your own money may take a lot of time and effort, especially if you have multiple investment or retirement accounts, or you’re doing self-directed investing.
Money managers typically have access to information — including analytical data, research reports, financial statements, and sophisticated modeling software — that the average person doesn’t have. So they may be better equipped to know about market trends and help you make informed decisions.
For investors who have struggled to understand how to best put their money to work in order to meet financial goals, a money manager might be worth considering.
3 Tips on Choosing a Money Manager
Here are a few things to keep in mind when choosing a money manager.
1. Know What You’re Looking For
Before hiring a money manager, figure out what type of financial help you need. If you’re just starting out, you may want to hire someone who can help you put together a long-term financial plan, for example.
2. Check Credentials
An online check with the SEC’s Investment Adviser Public Disclosure website, FINRA’s BrokerCheck, and/or your state’s securities regulators will show how long an advisor has been registered, where they have worked, and what licenses they hold.
3. Interview
After narrowing the search, it can be wise to interview candidates to get an idea of how they communicate, how they typically work with clients, and how they are compensated. If a money manager is evasive when discussing costs and fees, that’s a red flag.
The Takeaway
A money manager specializes in managing investment portfolios and has a fiduciary duty to clients. There are many different types of advisors, planners, and managers in the financial world, so it’s important to know the differences.
It’s also important to keep in mind that hiring a money manager can have pros and cons. Bringing in professional help may not be the best route for everyone.
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FAQ
What is the difference between a money manager and a financial advisor?
Generally speaking, a money manager offers more specialized investment services to clients. Money managers typically do such things as provide personalized advice about building a portfolio, track market conditions, and buy and sell securities on behalf of clients. Financial planners, on the other hand, cover a wide range of financial professionals. They could be investment advisors, insurance agents, or accountants, for example.
Is it worth it to use a money manager?
Whether a money manager is worth it depends on an individual’s financial situation and needs. For someone who is looking for a professional to help them invest in the market, a money manager may be worth it, for example. Just be aware that there are costs to hiring a money manager, and the costs may not outweigh the benefits for everyone.
Is it better to have a financial advisor or a financial planner?
It depends on your individual circumstances, goals, and needs as to whether a financial advisor or financial planner is better suited to your situation. If you need more targeted help with investing or insurance, for example, you may want to consider a financial advisor. If you want long-term, big-picture financial planning, you may want to consider a financial planner. Either way, it’s wise to do research to find out what each type of professional offers and the fees they charge. You can also meet with them to see if they are a good fit for you.
This content is for educational and informational purposes only. The products, services, or features discussed may not currently be available via the SoFi platform. Any references to third-party products, services, or companies do not constitute an endorsement, recommendation, or solicitation by SoFi. Readers should independently evaluate their options and consider their individual financial needs and circumstances before making any decisions. ©2026 SoFi Technologies, Inc. All rights reserved.
Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®
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