Wealth management is a financial term that gets tossed around often. Along with financial planning, retirement planning, estate planning, and others, wealth management covers a lot of material and can even be used interchangeably with other financial terms. For example, wealth management and financial planning are similar as they both assist clients with investment decisions and objectives. However, what sets them apart is the field of wealth management versus that of financial planning. Someone who procures wealth management services will typically have different goals related to a higher net worth than typical financial planning clients.
What is so different between wealth management and financial planning? Do high-net-worth clients create an entirely new approach? Well, consider a wealth manager as a surgeon and a financial planner along the lines of a general practitioner. There are unique specializations that set them apart. When dealing with a high-net-worth population, different strategies must be employed when dealing with estate planning, income tax planning, and more. Even social security benefits and retirement planning will call for a different course of action. Most likely, a high-net-worth client will not need the entirety of their retirement savings and particular plans need to be made for heirs and beneficiaries.
The term “high-net-worth client” is broad and, depending on the firm and the ensuing wealth management requirements could range from as little as a $250,000 net worth to a net worth of $5 to $10 million or more. Typically, the smaller the market, the smaller the requirements and vice versa.
What Is Wealth Management?
The term “wealth management” is often spoken in the boardrooms of ritzy financial firms, in trade journals, and Forbes and Money magazine articles, Financial advisors are typically fond of sprinkling it into conversation with clients. However, many professionals find it difficult to actually define the term with any degree of certainty.
But, actually, wealth management is very straightforward. From the prosperous individual’s point of view, wealth management is simply the process of solving or improving his or her financial circumstance. From the financial advisor’s point of view, wealth management is the capacity of an advisor or advisory team to administer a comprehensive range of financial services and offerings to an affluent client in a consultative manner.
An additional characteristic of wealth management is that it is dispatched in a consultative approach. By being consultative, wealth managers are truly client oriented. A capable wealth manager meets a client without any assumption about what financial products or services are appropriate for that particular individual. Through the process of improving a client’s financial standing, the right wealth manager will be able to make informed decisions that pertain directly to that client and not just some “rich person.”
While it is not uncommon for an affluent individual to be consulting with a wealth manager to address a specific need like investment managing or retirement planning, the wealth manager’s top priority should be to understand the person in front of them and find out what is important and why. Only then will the wealth manager be able to bring in the proper authorities and supply the appropriate financial products.
Ultimately, wealth management is the consultative process of meeting the needs and wants of affluent clients by providing the appropriate financial products and services through the coordination of a team of experts to undertake the requirements and desires of affluent clients.
Wealth management is a discipline that integrates multiple areas of financial services and rolls them into a single comprehensive package that’s meant to address the total of an individual’s financial situation. Wealth management focuses on the management of relationships between an individual’s many advisors, including lawyers, accountants, and insurance agents. The ultimate goal of wealth management is to enhance and perpetuate wealth over the long term.
Why Is Wealth Management Important?
Are you worried you may outlive your money? Do you want to provide for your children as much as you can and not be a financial strain to them? Would you like your family to inherit your wealth?
When considering high net-worth individuals, there’s a propensity to see them as people devoid of problems, living a life of luxury. Because they’ve been able to create such a significant amount of wealth over time, they’re set for life and have nothing to worry about. This line of thinking dominates the lives of the high-net-worth populace and is often not the case.
In reality, possessing a high level of wealth is far from a worry-free situation. Maintaining wealth means needing to tend to it, whether through the employment of tax, estate, or successful investment planning.
Perhaps the most important reason for the importance of wealth management is the issue of retirement. The cost of living has been and still is, steadily rising in the United States and beyond. At the same time, The United States’ social security system is also strained due to the ever-volatile political landscape and the fact that the number of elderly recipients is on the rise. Headlines in recent years have focused on concerns regarding raising the retirement age and when you do reach retirement, whether or not you’ll have enough money. Because of these rising costs and uncertainties, many retirees are even leaving for friendly ex-pat countries that offer more affordable living conditions.
Under these circumstances, it’s increasingly vital to specify systematic retirement and wealth management strategies to ensure your wealth is protected.
The most imperative phase in the planning process is to institute clear and concise objectives for your wealth management plan. You should then create a plan that is responsive to your core principles, needs, and concerns. It should recognize and focus on the desired level of involvement you want when it comes to handling certain philanthropic actions and should include the interests, expertise, and desires of heirs. Furthermore, it should incorporate your total estate plan in a way that is timely, effective, and tax efficient.
Who Can Benefit From Wealth Management Services?
More people than you might think actually qualify for wealth management services. Some firms require a minimum of $250,000 in net worth to be eligible, while others require as much as $10 million. The benefit of working with a smaller and local firm – particularly one in a smaller market – means that their requirements will be far lower and the level of attention to their clients will be far higher.
Wealth management should be considered an important practice for each individual. Managing financial investment, income, tax and other sources of cash helps you keep an eye the money that you possess. It is essential to protect your wealth and be aware of the current status of your finances. When you are aware of how your money is performing, it’s easier to make prudent decisions that affect your future.
Wealth management provides a complete analysis of your financial standing. It will deliver particulars of the current status of your assets. When you know where you stand, it is easier to get advice and make decisions for investments and financial plans. You will be able to evaluate your requirements and work on getting what you want for yourself and your loved ones.
With control over how your wealth is managed and, with an end goal in mind, you can expect a sense of comfort for you and your loved ones.
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Wealth management is more than just investment advice. It should include all aspects of your financial well-being. The focus is that, instead of trying to mix and merge snippets of advice and numerous products from an array of experts, high-net-worth individuals benefit from a holistic approach in which a wealth manager directs all the services necessary to manage their assets and prepare for future needs of you and your family.
Needless to say, the most vital function in wealth management is using time wisely. The sooner you begin this process, the more time your investment can work for you.
Here, at HeartStone Advisors, we welcome you to contact us with any questions you have regarding your wealth management needs. We are more than just a wealth management firm, we are a family-run company that is not just in the financial business but is in the people business. Call today!