As you consider your financial situation and evaluate whether or not a wealth manager may be right for your circumstances, you might be asking:
What, exactly, does a wealth manager do?
It’s a good question. The term “wealth management” is often used in a general sense, which can make identifying the actual services of a wealth manager somewhat difficult. In this article, I’ll seek to clear things up by unpacking some of the main services a wealth manager performs.
These things are what a wealth manager does.
The Meaning of Wealth Management
Before we dive in, let’s revisit the definition of wealth management. Wealth management is customized, comprehensive, and long-term financial consulting and services for affluent individuals.
With this definition in mind, let’s get into the activities involved.
What a Wealth Manager Does
A wealth manager:
Works Over the Long-Term
Wealth managers provide ongoing consulting services. They don’t simply deliver a one-off financial plan or offer a three-month strategy to follow. Wealth management is a long-term game.
Accordingly, if you’re looking for wealth management services, you should search for a wealth manager that you’re compatible with. You’re looking for a professional partner, not a product. The fit matters in these engagements.
Offers Customized Consulting
Wealth managers provide bespoke services. They do not deliver cookie-cutter, one-size-fits-all programs; that’s not wealth management.
Instead, a wealth manager will take time to comprehensively review a client’s portfolio. They’ll engage in discussions to deeply understand their clients’ personal and financial goals. Then, when they’ve developed a thorough understanding, they’ll shape a plan tailored to their clients’ unique contexts.
Offers Comprehensive Financial Services
Finally, wealth managers offer comprehensive financial services. Often, wealth managers are guiding the full financial picture for their clients.
This involves services like:
Investment Management (and Risk Management)
This is one of the first services that people commonly associate with financial advisors (of which wealth managers are a subset). Investment management is closely tied to risk management; wealth managers will seek to understand clients goals and appetite for portfolio volatility and shape a strategy that aligns with them.
A wealth manager is typically authorized to execute investment deals on the client’s behalf.
Tax and Estate Planning
Common sense tax and estate planning is appropriate for everyone, regardless of their wealth. For affluent individuals, executing commonly used strategies can make a meaningful difference in the long-term financial wealth. Tax planning can be particularly useful for high-net-worth individuals who have complex financial pictures to manage.
These people can end up losing significant portions of wealth to taxes without intelligent financial structuring. Wealth managers can often help to structure client portfolios in ways that capitalize on tax benefits and savings.
Estate planning is related in that it involves the consideration of estate and gift taxes. It is primarily focused on the thoughtful management and distribution of an individual’s assets during their lifetime, in the event they become incapacitated, and after death.
Risk is the possibility of a loss, which is a decline in value. There are all sorts of risks that can be managed. For instance, there are financial risks, such as the economic loss stemming from an accident and dealing with lost income and bills. Many risks are insurable, that is you can transfer risk to a third party for a fee. Sometimes it is financially prudent to retain risk, as the cost of insurance is much greater than the probability of economic loss. Wealth managers can help identify these risks and create optimal insurance strategies.
There are many types of insurance, including life insurance, health insurance, property insurance (car & auto) and even long-term care insurance. Wealth managers work closely with insurance agents and their clients to make sure sufficient coverage is in place to protect personal financial wealth. Structuring certain types of insurance products appropriately can also confer tax advantages in certain circumstances. Perhaps most importantly, appropriate use of insurance can provide peace of mind.
Nearly all affluent individuals can benefit from strategic retirement planning. Wealth managers can help to design portfolios that allow individuals to reach their retirement goals and invest in the lifestyle choices they’ll enjoy. This may involve investment management; it may simply involve advice. Sometimes, individuals who have worked hard to accumulate wealth need affirmation in spending it as they approach retirement.
Many successful individuals want to give back to the organizations and communities that have helped them achieve their personal goals. Beyond identifying charities or causes that resonate, charitable gifting can involve tax considerations and technical hurdles. Wealth managers can help to overcome some of these challenges by defining strategies that effectively distribute assets, while optimizing impact for charitable causes.
The above services are just examples of common areas wealth managers spend their time on. The key take-away here is that wealth managers have the ability to weave all of these services (and any other relevant ones) into thoughtful and comprehensive approaches to portfolio management. A wealth manager is not simply an insurance advisor or a retirement planner or an investment consultant; rather, they are a guide to creating an artful, integrated picture.
Looking for a Seattle Wealth Manager?
As you’re considering working with a wealth manager, I hope that this review of what a wealth manager does has been helpful. If you believe you could benefit from wealth management services in the Seattle area and you’re ready to take the first step, please reach out and get in touch.
I’m the owner and sole practitioner here at Sapling Wealth. I have over 30 years of financial service experience, which has given me a deeper understanding of the risks and rewards of investing and familiarity within a broad range of financial service offerings. If you’re ready to improve your financial situation and reach your goals with thoughtful wealth management, we may be a good fit.
Schedule a review of your portfolio today, and let’s take the first step toward figuring out what’s best for you.