What is Wealth Management?
Wealth management, first and foremost, is a consultative process. It’s a combination of private banking services and strategies to help you meet your needs and financial goals, be it strictly personal or for the business you run as well. The primary goals of wealth management are to: 1) increase your wealth, and 2) safeguard it for the future. Now, more than ever, you have to understand and define your own financial goals. Wealth management services mean you don’t have to do it on your own.
What is a Wealth Manager?
A wealth manager is your guide to all things that involve money. For someone to become a Certified Financial Planner (CFP), they need to pass a national test covering insurance, investments, taxation, employee benefits, retirement and estate planning — as well as meet experience requirements and abide by a code of ethics. As such, they’re the people who can help you make important financial decisions.
Beyond Managing Investments
The basic definition of managing investments is selecting the right balance of stocks, bonds, exchange-traded funds, mutual funds and other investment products that are suitable for your financial goals and retirement time horizons. The work that wealth managers conduct on your behalf, on the other hand, is not as easily defined. In fact, this basic definition is where a wealth manager’s job starts.
The services provided with a wealth management package will certainly include management of your investment portfolio, but that’s not all. Wealth managers also coordinate their clients’ dealings with other professionals such as insurance professionals, brokers, accountants and attorneys. Attorneys, aside from offering advice on tax laws, help to structure family corporations and trusts, and make the components of estate planning more complete.
Wealth managers are actively involved in their client’s retirement planning, too. This involves, among other things, updating and changing your investment profile based on where you are in your life cycle. Clients close to or in retirement, for example, are moved into more conservative investments. In addition, advisors will help with trust planning, insurance requirements and managing clients’ risks. Retirement planning includes protecting and producing income from investments during retirement.
Business planning is also a service that a wealth management consultant may offer to clients. Small businesses and enterprises alike need to be preserved, especially if the business is to be passed on to future generations. A wealth manager can help families grow their businesses, and put a succession plan in place so that the growth continues beyond the present owners. On the other hand, for those who want to acquire or sell businesses, wealth managers can provide the advice as well as find the buyers and sellers needed.
To be sure, a wealth manager goes beyond managing your investments to provide the best financial advice for you as a client. The relationship may need to last and become stronger, even over the long-term, so finding the right manager for you is essential. Learn how to find the right fit in the next part of this guide.