What Is Wealth Management?

One common misconception about financial planning is that it requires a large sum of money to get help from a financial advisor. Working with an advisor can be beneficial for almost anyone.

This myth could be due to the meaning of “wealth,” which can mean many things to different people. Everyone can benefit from some financial planning, such as budgeting, achieving personal financial goals, paying off credit, protecting your income, or buying a house. However, as you start to accumulate wealth, or to anticipate significant increases in wealth, the amount of service you will need to help you get there will also increase.

You may require more than basic financial planning. These additional considerations may require the assistance of a wealth management advisor. Wealth managers like Thane Stenner can organize your finances, bring them together and make a complete picture of your financial life.

Wealth management simply combines disparate accounts and policies, contracts, assets, and other financial considerations to create a comprehensive analysis. This includes financial and investment tools, advice, risk management, tax planning, retirement planning and legal advice. Your wealth management team will get a better understanding of you and your goals. Your wealth management team will then take a look at your financial picture, both now and in the future. The team will work with you to maximize your financial situation.

Wealth management is a strategy to grow, protect and pass your wealth. How does this look in practice? While wealth management strategies can vary from person to person, they will often include the following:

General advice on investing: A wealth manager will help you to create and manage an investment portfolio. However, he or she will also educate you about what you have, why it is important and how it can contribute to your overall portfolio health.

Personalized investments: The two main drivers of investment portfolio returns are asset allocation and security selection. To create a personalized portfolio, a wealth manager draws on their knowledge of the markets and economy as well as your personal understanding. They can execute strategies that are difficult or otherwise impossible to implement for individual investors, such as buying on margin and including less liquid assets.

Tax management A wealth manager will examine how a portfolio is constructed and managed, including what assets are held, which accounts they consist of, and how long a stock remains in a portfolio. This will help minimize your tax burden and maximize your wealth. A wealth manager might recommend that you sell a stock that is underperforming to recover your losses and reduce your tax burden for the year.

income taxes, capital gains tax, and income taxes can all threaten your wealth while you are alive. Gift or estate taxes could also threaten the wealth you want to leave behind to your loved ones. To preserve your wealth, a wealth manager can help you devise a plan to reduce these taxes.

The employee compensation plan. Wealth managers have experience with all types of compensation plans. Deferred compensation and equity plans can be incorporated into your overall wealth management plan. They can also help you to value your plan or develop a strategy for diversifying from your plan to a larger and more liquid portfolio.

Life insurance: Although life insurance can financially protect your loved ones from the unforeseeable, it can also help you to improve your investment strategy. For example, a permanent insurance policy can accumulate cash value over time that you can use to generate income, rather than sell investments. This allows the assets to recover and not lock in losses. You can also have a wealth manager help you to understand how life insurance could be added to your overall plan.

Advice on legal matters: Your wealth manager will coordinate your financial portfolio with other advisors like your attorney to ensure that all necessary legal documents are in place. This could include wills and trusts. It may also include durable powers of attorney, letters, intent, and other beneficiary forms.

Charitable donations if you’d like to donate to a cause, your wealth manager can help to ensure that you do so in the most tax-beneficial way. 

Wealth management is a way to ensure your financial situation doesn’t become more complicated.