English
Over the course of one’s life, there are goals and milestones they would like achieve like financial security, owning a house, education and retirement.
And leaving savings in the bank will expose them to inflation, devaluing them over time. Wealth management is a service that aims to grow one’s assets to be able to achieve those goals.
It takes a holistic approach to investing and deploying one’s wealth with the aim to protect, grow and / or transfer this wealth efficiently.
Wealth management is a tailored financial advisory service that provides individuals and households (particularly high net worth and affluent clients) with personalized and comprehensive strategies aimed at meeting the client’s financial goals.
These strategies look at current and future goals and are adapted over time to the client’s changing circumstances, and fluctuations in the market. The scope of wealth management includes a host of services, such as:
Managing a personal budget, cashflows and expenses in addition to planning for financial milestones such as home ownership, education, and retirement.
Investment management services, including asset management, seeks to grow an investment portfolio by incorporating investment strategies, diversification, asset allocation, and periodic rebalancing.
Protects wealth through services such as insurance on property, health, and liability.
Ensures that assets and wealth are transferred to heirs or charity in an efficient manner through drafting wills, setting up trusts, and tax minimization.
Incorporates charitable giving into one’s financial planning strategy, as well as advising on tax-advantaged donations that will do the most good.
These strategies aim to reduce the tax burden through tax efficient investment accounts, deductions, and credits.
Read more about: Strategies For Tax-Efficient Investing
- Wealth management provides the customer with a comprehensive financial plan and strategy that will see them through the rest of their lives and helps them achieve life and financial goals.
- It provides them with access to experienced professionals who can guide them through complex financial, investment and taxation decisions.
- Delegating the execution of these strategies to competent managers and advisors gives the customer peace of mind and allows them to focus on other priorities.
First step when choosing a wealth manager is to ensure they have the right credentials and reputation.
Vetting must verify professionals hold certifications like Certified Financial Planner (CFP) or Chartered Financial Analyst (CFA), and must have a proven record with handling clients similar to your financial profile. Research these clients and look for reviews, testimonials and legal standing.
Once verified and vetted, the manager must be able to provide the services needed to achieve financial objectives.
Then it comes down to the fee structure and if it is affordable as well as the personal fit.
Upon selecting a wealth manager, the following steps take place:
A wealth manager starts by assessing the client’s financial position, including tallying their assets, liabilities, income and expenses. They then work with the client to set short-term and long-term financial goals.
A strategy is then developed based on the client’s objectives, investment preferences and risk tolerance.
This usually involves the use of a diversified investment portfolios and tax saving instruments. It also involves financial planning strategies such as retirement savings plans.
The strategy is then executed by investing in selected financial instruments, insurance policies, or creating trusts.
The wealth manager works with a broad scope of professional service providers, including legal, tax, and estate planners, to provide a comprehensive service.
The strategy is subject to periodic review to account for changes in financial markets, regulations and tax codes, as well as the client’s changing circumstances.
Periodic revisions of the strategy to monitor if it is indeed serving the objectives of the client is crucial.
Wealth managers can charge for their services in multiple structures. Some charge flat fees paid weekly, monthly, annually, etc.
Some charge a commission paid through sold investments. The majority operate a combination of the two, with a fee that takes into account the assets under management plus a commission on investments sold.
The most glaring challenge is the high costs and fee structure associated with it. They can require higher fees and many require a large asset portfolio, making it cost prohibitive.
Market volatility risk and wild swings can pose a threat to any type of investor, so is changing tax regulations. It is crucial to select the right wealth manager that will diligently monitor the changing environment and adapt accordingly.
Disclamer:
This post is for educational purposes only, and the Firm does not directly or indirectly provide these services.
