Wealth management and financial advice — what’s the difference?

Australians are becoming wealthier, but this means financial decisions are also becoming more complex. There are a myriad of services to help with making financial decisions easier but with all the options, it may be confusing to choose which service you actually need. 

Wealth management and financial advice are examples of services that can be challenging to differentiate. At Focus Partners Australia, we offer both but let’s first start by exploring the differences of these two services so you can decide which one would suit you.

What is wealth management in Australia?

Wealth management is a holistic, long-term strategy to grow your wealth. Suited for high-income professionals, business owners or retirees, wealth creation strategies involve sophisticated ways to protect and transfer your wealth. They provide a whole-of-wealth approach and include:

• Investment management
• Tax structuring
• Superannuation optimisation
• Estate planning
• Risk management

The wealth management services at Focus Partners take into account your risk appetite and focus on aligning a strategy that meets your evolving needs.

What is financial advice and why is it different to wealth management?

Financial advice is about providing goal-based guidance for something targeted like budgeting or preparing for retirement. While it considers your goals, the advice given is generally more broad than private wealth management. 

Financial advisers in Australia can help with insurance policies and managing savings. They can also provide advice on investments and tax planning to further ensure you’re making the most of your money.

Most people may have come across financial advice as a concept as it’s more accessible and widely used. In fact, financial advice is often the catalyst for wealth management.

When do you need wealth management?

The question then remains at what point would you consider wealth management services. Due to the complexity of wealth creation strategies, it’s not something that is executed and then forgotten about. Wealth management is ongoing and must evolve as you progress through life and enter different life stages.

For business owners with succession on your mind, you may want to consider private wealth management. Wealth strategies are also beneficial for people with multiple income streams or large investment and property portfolios. The holistic approach of wealth management means you’ll implement strategies that work together. 

One thing to keep in mind when engaging a wealth management expert is to have clarity on your objectives. If you’re looking for tax-efficient strategies or intergenerational wealth planning, wealth management may be more what you need.    

How wealth management supports long-term wealth creation

With private wealth management, you’re able to dive deep into the different areas that make up your financial position. The key is creating ongoing wealth creation strategies that improve every aspect, rather than looking at each in isolation.

• Investment strategy and portfolio management

With different investments and large portfolios, there are ways to diversify to ensure wealth creation. Aligning a wealth strategy ensures your entire portfolio grows overall. 

• Tax minimisation strategies

For high-net-worth individuals, you’ll have different tax obligations. If you look at each obligation separately, you may find you pay more tax than necessary. Having a wealth strategy will look at these obligations holistically and minimise your tax. 

• Superannuation optimisation

There are ways to ensure your superannuation is optimised and grows alongside your other wealth creation. Depending on your financial goals, you may be interested in incorporating a self-managed super fund (SMSF). Your wealth management expert can help determine whether an SMSF will support your other strategies. 

• Risk and insurance planning

Wealth management takes into account your risk appetite across your portfolio and this means looking at insurance planning that supports your strategies.

• Estate and legacy planning

A crucial part of wealth creation is transfer of wealth and succession planning. Growing your wealth is only complete once you have a plan on what happens beyond your lifetime. 

When is financial advice alone enough?

Since financial advice can be broad and targeted at a particular goal, it may be more helpful for early career professionals or individuals with simple financial situations. 

It’s a good starting point if you’re new to any form of financial planning. You can get advice on savings, debt reduction and basic investments. Once you’ve experienced financial advice, you’ll then be able to determine whether you need more complex services like wealth management or strategic financial advice. 

Wealth management vs financial advice — key differences

Here’s a snapshot of the differences between the two. It’s important to note that wealth management services incorporate elements of financial advice to provide a holistic approach.

Feature	Financial advice	Wealth management
Scope	Specific goals	Holistic end-to-end approach
Client	All income levels	High-net-worth
Strategy	Short to medium term goals	Long-term wealth creation
Services	Budgeting, super, insurance	Investment, tax structuring, estate, succession planning
Complexity	Moderate	High
Cost	Flexible	Ongoing

The rise of strategic wealth management in Australia

The demand in Australia has increased for more complex services like strategic wealth management. This is because there’s an increase in high-net-worth individuals with complex portfolios. Given the increase in wealth, there is also a growing interest in intergenerational wealth transfer.

To accommodate this increase in demand, the industry has seen a shift towards more digital and personalised advice. Environmental Social Governance (ESG) investing has seen an uptake and more clients have a breadth of assets including property and private equity. At Focus Partners Australia, we’re here to deliver integrated strategic financial advice that caters for the changing needs of our clients.

The holistic approach of wealth management is attractive as it delivers better outcomes for high-net-worth individuals. Wealth management encompasses strategic financial advice that aligns all the different parts of your financial position including:

• Investments
• Tax
• Retirement
• Legacy

How to choose the right wealth management adviser in Australia

To ensure you’re getting access to the right wealth management experts, it’s important to check qualifications and compliance with the National Treasury and ASIC standards. Ensure you also ask about their fee structure and whether they have experience with similar clients to yourself.

In terms of the approach, it’s crucial to have an adviser with holistic wealth creation strategies that are proactive but also reactive to evolving needs.

Frequently asked questions

Is wealth management only for the wealthy?

Not necessarily. While traditionally aimed at high-net-worth individuals, many Australians benefit from structured wealth strategies as their assets grow.

Do I need a financial adviser or a wealth manager?

It depends on your financial complexity. Simple goals may require a financial adviser, while more complex finances benefit from wealth management.

How much does wealth management cost in Australia?

Fees vary but are typically higher than standard financial advice due to the broader and ongoing services provided.

Can a financial adviser provide wealth management services?

Yes, many advisers offer both, but not all provide comprehensive, integrated wealth strategies. It’s important to explore whether the approach aligns with your needs.

Ready to take control of your financial future?

If you’re finding that traditional forms of financial advice are no longer enough, it’s time to look at wealth management. The need for strategic financial advice is gaining momentum and our team at Focus Partners Australia is ready to help. Let’s explore tailored wealth management strategies that align with your financial goals. Get in touch today to start the conversation.