There’s a good chance you’ve heard about wealth management before, but you had no idea how much it could help you improve your life.
If you feel as though you are equipped to handle your own taxes, then there are plenty of options for free tax preparation, although it would be highly recommended that you seek the help of an expert depending on the complexity of your financial status. There are many advantages to seeing a financial specialist. For example, if you speak to an experienced tax accountant, they’ll know everything there is to know about taxes. The same is true when consulting an investment specialist or retirement adviser. The disadvantage is that their expertise is limited to their particular line of business.
There are many advantages to seeing a financial specialist. For example, if you speak to an experienced tax accountant, they’ll know everything there is to know about taxes. The same is true when consulting an investment specialist or retirement adviser. The disadvantage is that their expertise is limited to their particular line of business.
Wealth management, on the other hand, handles your finances from a different angle. Or at least when done properly. When you go visit a wealth manager, they will ask you what your financial goals are.
Are you trying to save for retirement? Maybe send the kids to college? Are you interested in buying a house or investing in real estate so you can increase your revenue? Do you want to have $1 million dollars by the time you reach 40, or are you trying to build an estate you can pass on to your children?
The first conversation will mostly revolve around outcomes. Based on the goals you give them, they will come up with a strategy. This is also called goal-oriented advising. They’ll give you advice on how you should manage your money to achieve the outcomes you want. The advantage is that their advice and plan will be cross-disciplinary, covering taxes, investments and more.
Understanding the Basics of Wealth Management
Wealth management encompasses more than investment advice since it takes into account all aspects of the client’s life. It’s based on the idea that high net worth individuals who are often the people most interested in a wealth manager’s services benefit more from a holistic approach than having to integrate advice from several financial professionals. Wealth managers take it upon themselves to coordinate these different services on behalf of their clients.
Some do specialize in a particular area, mostly depending on the types of businesses their clients are involved in. The best wealth management firms usually coordinate input from several financial experts to develop the best strategies for each of their clients.
They come up with a plan on how to maintain and increase the client’s wealth based on factors like financial situation, goals, and level of comfort regarding risk. After this plan has been developed, discusses and agreed upon, the wealth manager in charge of the account will meet with the client for regular reviews and updates. Their goal is to help the client, so they can continue to work together on a long-term basis.
Wealth managers use a variety of strategies, from value investing to growth investing. Since they tend to work with large accounts, they have a slightly different approach to a typical financial advisor and can give their clients access to a broader range of investments, including private equity offerings and hedge funds. Their services usually extend beyond investing to all aspects of the client’s life, including estate planning. Their strategies always match their client’s needs. For example, if they have a client that’s planning to retire soon, they will shift to safe investments focused more on maintaining wealth rather than growth.
What Can a Wealth Manager Do for Me?
If we were to make a hierarchy of financial planning services, wealth management would be right at the top. The role of a wealth manager is close to that of a consultant. Although they do tend to have more expertise in a particular financial field, the services they provide usually involve coming up with a holistic strategy and then coordinating the efforts of other financial advisers that handle specific parts of that strategy. For instance, once they come up with an investment strategy, they will work with a banker on implementation. For the client’s taxes, they will work with a tax consultant.
While some wealth managers prefer to have a more hands-on role, they usually handle the big picture and make sure their plan stays on track. They use the entire spectrum of financial disciplines to manage a client’s wealth for one set fee, but they can specialize according to their client base. Their practices differ according to the country – for example, the United States or Canada – and they can work more with clients interested in philanthropy, estate development, portfolio growth or retirement planning. They typically work as part of a larger firm in the finance industry. Depending on how their firm operates, you, as the client, may meet only if your designated wealth manager or with several members of your wealth management team.
Do I Have to Be Wealthy to Work With a Wealth Manager?
This is a bit of a tricky question. Wealth management is usually seen as a service for the exceptionally wealthy. Even the name seems to imply it, and this idea is reinforced by many.
Yet, it’s misleading. It has nothing to do with being rich. Sure, some wealth managers have a minimum portfolio size, and they might refuse to oversee assets worth less than $1 million. That just means that this particular firm is not interested in middle-income clients.
But many are, and wealth management is really for everybody. Of course, you need to have enough money to pay for the services they provide, but wealth management comes at a range of prices well within the reach of most Canadians.
You don’t have to be extremely wealthy to have financial goals and free tax preparation to want to learn how to manage and grow the wealth you do have. Maybe you want to save money for a house, for your kids and for your retirement. You can learn how to do this by yourself, by looking for information from different sources and coming up with your own strategy, but a professional that does this for several hours a day, five days a week for years and years certainly knows how to do it better.
Rich or not, we all a retirement account and we all pay taxes. We want to know how to spend and how to invest so we can put the pieces together and create a stable financial situation for ourselves. A wealth manager helps you make those connections and put the pieces together.