Hello Friends!
What do you think when you hear the term "wealth management"?
For many, they think it means managing lots of dollars.
While investment management is certainly one aspect of wealth management, it's only a fraction of how wealth managers provide value.
Today, we're exploring what wealth management is, the value it brings to the table, and how to choose what's best for you.
What is Comprehensive Wealth Management?
At its core, wealth management is about looking at the bigger picture of your life, understanding how different elements impact your financial life, and then integrating these different elements to help you achieve your personal and financial goals.
Typically, this includes:
Public Investment Management: This involves managing investments in publicly traded assets, such as stocks, bonds, mutual funds, and exchange-traded funds (ETFs). The goal is to build and maintain a diversified investment portfolio that aligns with your financial goals, risk tolerance, and time horizon.
Financial Planning: The process of defining financial goals, and creating strategies to achieve them. This includes budgeting, retirement planning, education funding, and setting short-term and long-term financial objectives. It serves as the foundation for all other wealth management decisions.
Tax Strategies: Planning financial activities with a focus on minimizing tax liabilities and maximizing after-tax income. This can include selecting tax-efficient investments, taking advantage of tax-deferred accounts, and employing tactics like tax-loss harvesting to optimize your tax situation.
Estate Planning: Preparing for the transfer of your wealth and assets with tools like wills, trusts, powers of attorney, and healthcare directives. It ensures that assets are distributed according to your wishes, while minimizing estate taxes and legal hurdles for heirs.
Risk Management: This involves identifying, assessing, and addressing potential financial risks that could adversely impact your wealth. This includes insurance planning (life, disability, long-term care) and diversification strategies to protect against market volatility, illness, and other unforeseen events like lawsuits and caring for loved ones.
Comprehensive Wealth Management, on the other hand, takes things a step further by adding concierge-style services to increase coordination and free up your time. In addition to the disciplines above, Comprehensive Wealth Management typically includes:
Private Investment Management: This is the management of investments in private markets, including private equity, venture capital, and real estate. These investments often require a higher minimum investment and are less liquid than public investments, but they can offer higher returns and additional diversification benefits.
Tax Reviews, Planning & Filing: This component involves regular reviews of your tax situation, proactive tax planning to take advantage of new tax laws and strategies, and assistance with tax filing. The goal is to ensure compliance while optimizing your tax position.
Cash Management: This is the managing of daily cash flows, liquidity needs, and short-term investments. It ensures you have sufficient liquidity for your needs while optimizing the return on excess cash through vehicles like money market funds or short-term CDs.
Financial Education: We provide you and your family with the knowledge and resources to make informed decisions about your finances. This can include educating on investment principles, the impact of economic changes on your portfolios, understanding complex financial products, and even educating the next generation.
Concierge Coordination: This is where we provide additional personalized services to manage various financial and non-financial aspects of your life that indirectly impact your financial well-being. This can include coordination with other professionals (lawyers, accountants, etc.), lifestyle management, and assistance with major purchases or travel plans.
The Value of Comprehensive Wealth Management
What if every time you needed groceries, you had to go to a different store: one store for milk and eggs, one store for noodles, one store for veggies, another store for packaged foods, and another store for ice cream?
You'd be exhausted and frustrated. That's why we have grocery stores and supermarkets.
But that's how most of our financial system works: a bank, an investment advisor, an accountant, an insurance agent, an estate lawyer, etc.
The value of Comprehensive Wealth Management is simple:
A dedicated, trustworthy, and credentialed professional who coordinates everything for you, finding the answers you need when you need them, and freeing up your time.
Choosing What's Best for You
So how do you decide which professional or service fits you best?
Here are some things to consider:
If you only care about investment returns and you are not an accredited investor, then investment management might be the best solution for you.
If you want to free up your time, or align your finances to best achieve your goals, or want private investments, or if you're an accredited investor, then Comprehensive Wealth Management might be the best fit for you.
If you want to manage everything yourself because you enjoy spending the significant time it takes to do it properly (coordinating the professionals, building a portfolio, trading, etc.) then financial planning might be the best option for you.
Have a great week!
Garrett
2 April 2024
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