WHAT IS LIFETIME FINANCIAL PLANNING

Understanding Wealth Management

Wealth management is more than just investment advice: It can encompass all parts of a person's financial life. Instead of attempting to integrate pieces of advice and various products from multiple professionals, high net worth individuals may be more likely to benefit from an integrated approach. In this method, a wealth manager coordinates the services needed to manage their clients’ assets, along with creating a strategic plan for their current and future needs—whether it is will and trust services or business succession plans.

Many wealth managers can provide services in any aspect of the financial field, but some choose to specialize in particular areas, such as cross-border wealth management. This may be based on the expertise of a specific wealth manager, or the primary focus of the business within which the wealth manager operates.

In certain instances, a wealth management advisor may have to coordinate input from outside financial experts, as well as the client's own service professionals (for example, an attorney or accountant) to craft the optimal strategy to benefit the client. Some wealth managers also provide banking services or advice on philanthropic activities.

Wealth Management Example

Generally speaking, wealth management offices have a team of experts and professionals available to provide advice across different fields. For instance, consider a client that has $2 million in investable assets—in addition to a trust for their grandchildren—and a partner that has recently passed away. A wealth management office would not only invest these funds in a discretionary account, but provide will and trust services required for tax-minimization and estate planning.

Those wealth management advisors in the direct employ of an investment firm may have more knowledge in the area of investment strategy, while those who work for a large bank may focus on the management of trusts and available credit options, overall estate planning, or insurance options. In short, expertise may vary across different firms.

Wealth Management Business Structures

Wealth managers may work as part of a small-scale business or as part of a larger firm, one generally associated with the finance industry. Depending on the business, wealth managers may function under different titles, including financial consultant or financial adviser. A client may receive services from a single designated wealth manager or may have access to members of a specified wealth management team.

Fees for a Wealth Manager

Advisors can charge for their services in several ways. Some work as fee-only advisors and charge an annual, hourly, or flat fee. Some work on commission and are paid through the investments they sell. Fee-based advisors earn a combination of a fee, plus commissions on the investment products they sell.

A survey of nearly 1,000 advisers finds the median advisory fee (up to $1 million AUM) is 1%. However, many advisors charge more, especially on smaller account balances. Individuals with larger balances can often pay substantially less, with the median AUM fee declining as assets increase.¹

Credentials for Wealth Managers

You should check the credentials of a professional to see which designation and training might best suit your needs and situation. The top three professional advisor credentials are Certified Financial Planner, Chartered Financial Analyst, and Personal Financial Specialist. Many websites for professional certifying organizations allow you to vet if a member is in good standing or has had disciplinary actions or complaints.²³

FINRA, the financial industry regulator, has a tool that explains professional designations. You can also see whether the issuing organization requires continuing education, takes complaints, or has a way for you to confirm who holds the credentials.⁴

Strategies of a Wealth Manager

The wealth manager starts by developing a plan that will maintain and increase a client's wealth based on their financial situation, goals, and risk tolerance.

Importantly, each part of a client’s financial picture, whether it is tax planning or wills and estates, is coordinated together to protect the wealth of the client. This may coincide with financial projections and retirement planning.

After the original plan is developed, the manager meets regularly with clients to update goals, review, and rebalance the financial portfolio. At the same time, they may investigate whether additional services are needed, with the ultimate goal being to remain in the client’s service throughout their lifetime.

1. Comprehensive Needs Analysis | Budgeting & Monitoring -

2. Investment Planning

3. Retirement Planning

4. Tax planning

5. Risk Management & Protection

6. Estate & Trust Planning | Succession Planning

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