These days, there are so many terms used to describe what financial professionals do – advising, coaching, consulting, planning, guiding, managing, etc. – none of them seems to hold much meaning, for investors or those in the industry.
And that’s a shame. Because there is a difference.
Wealth management is one of the terms that is most overused, and it’s often misunderstood. But it’s actually pretty straightforward. Wealth management takes things up a notch, with an adviser or advisory team providing a full range of services for the client in three distinct ways.
1. Investment consulting
You probably see ads and hear pitches every day from individuals and companies who want to sell you investment products. Some do it better than others. Although any licensed adviser can help you on this platform, a good wealth management team can provide a wide variety of options to choose from.
2. Advanced planning
This is where a wealth manager really differentiates himself. Few advisers do this type of planning, which includes:
- Wealth enhancement: This is the use of strategies to deal with cash-flow issues and liquidity concerns, mitigate taxes and maximize growth.
- Wealth transfer: Advisers look for the most efficient ways to pass your wealth on to your heirs in a way that lets your beneficiaries keep most or all of the money.
- Wealth protection: For those who are subject to a lot of liabilities, there are strategies that can help protect hard-earned savings and avoid any blind spots.
- Charitable giving: With proper planning, donating to a charity or charities can be a win-win, maximizing support for a favorite cause while making the most of certain tax advantages.
3. Relationship management
This is about building a trusting partnership that goes beyond the basics, thoughtfully connecting with clients and their needs in two ways:
- The client relationship: Through a careful discovery and review process, the adviser can see where clients are now and where they want to go, and look for any gaps that might exist.
- A professional network relationship: A top-notch advisory firm will build a team around each client to help with all kinds of issues. It could include a CPA, an estate-planning attorney, a property and casualty expert, a long-term care consultant or some other professional. And, if the client already has some of these experts in place, the team will communicate and work with them to further enhance their efforts.
A wealth manager’s No. 1 aim is to find out what’s important to you and provide financial solutions. If you’re looking for a full-service, collaborative approach to reaching your financial goals – now and in retirement – an adviser who practices true wealth management could be just the right fit for you. I typically suggest talking with your friends and family and get a referral that way. When you sit down at your first meeting, ask questions.
- What does their typical client look like?
- What net worth are they used to working with?
Wealth managers should be able to help with tax-reducing strategies, preparing an income plan, maximizing Social Security and making sure estate-planning documents are in order.
Securities offered through GF Investment Services, LLC. Member FINRA/SIPC. Investment Advisory Services offered through Global Financial Private Capital, LLC. California Insurance License #s 0B34918
Kim Franke-Folstad contributed to this article.
David Kanani is the president of Kanani Advisory Group (opens in new tab). He has passed his Series 7 and Series 65 securities exams, and is also licensed to sell life insurance and annuity products. He holds a bachelor’s degree in business administration from the University of Louisville.
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