Wealth management is a type of financial advisory service for people with a high net worth, such as accredited investors. The wealth management process entails several critical steps that outline the journey to retain financial success now and in the future.
What Is Wealth Management?
Wealth management aims to help high-net-worth clients continue to protect their assets, reduce their financial risks and potentially grow their wealth over time. This specialized form of financial advising involves more than just choosing investments. It is a premium service designed to meet the unique needs of wealthy individuals. Examples of wealth management services include financial planning, estate planning, investment management, legal planning, tax and accounting services and retirement planning.
What Is the Wealth Management Process?
Wealth management advisors help financially-wealthy clients build a secure future by offering strategic plans to save and allocate money to achieve a financially-secure retirement. The primary steps involved in the wealth management process include:
1. Establish Financial Goals and Objectives
The first step in the wealth management process involves establishing financial goals and objectives. It is important to have a clear vision for achieving various financial goals relating to education, career, retirement and other personal and business goals. A wealth management firm must have a strong understanding of what their client is trying to achieve when making recommendations. A client’s goals play a direct role in what type of wealth management plan is offered and how each strategy will play out.
2. Evaluate Current Financial Assets
The second step of the wealth management process is an in-depth evaluation of a client’s current financial assets. This may include bank deposits, stocks and bonds, as well as real estate holdings and investment accounts. An asset evaluation can help clients better understand where they stand currently and predict where a client could be in the next 5, 10 or 20 years if they follow a specific financial strategy. A wealth management advisor may also perform a gap analysis to determine what steps need to be taken to potentially achieve goals. Topics such as asset allocation, cash flow management, tax strategies, investment plan options and risk tolerance will be covered.
3. Process and Analyze Information
The next stage in the process involves the processing and analyzing of the client’s financial information. A wealth management advisor will analyze the client’s total investment and wealth situation to understand better what steps need to be taken to reach established objectives. This aspect of wealth management is partially based on science and academic research, which helps advisors provide investment advice backed by market data and insights.
4. Provide Options and Recommendations
Once both the wealth management advisor and client have a solid understanding of where the client stands and their desired goals, an advisor will create a detailed financial plan that outlines investment options. A wealth management advisor develops strategic recommendations based on the client’s unique portfolio and goals. The advisor and client will meet to ensure that no aspects of the plan have been overlooked before it is implemented.
5. Implement a Wealth Management Plan
Proper implementation of a wealth management plan is critical to ensure its long-term success. An advisor will work with a client each step of the way when putting the plan into action. During this stage, the client will be given as much information as possible to understand the strategies risks and rewards. Clients are also free to ask questions that they may have at any point in the wealth management process. A portfolio plan is activated through wealth management services like tax planning, asset allocation and estate planning.
6. Continuously Monitor the Plan
The wealth management process does not end when the custom financial plan is implemented. Instead, wealth management is treated as a continuous process that requires constant monitoring to ensure that the client remains on the right track. A wealth management advisor will continue to monitor the client’s process and if any circumstances change, the financial plan may need to be modified or updated. Advisors will also conduct periodic account performance evaluations and provide clients with the results. Regular meetings may also be scheduled to discuss the progress of the plan.
Speak With A Wealth Management Firm Today
Wealth management is a highly complex area of financial planning that typically requires the knowledge and guidance of an experienced wealth management firm. When a client agrees to work with a wealth management advisor, they commit to a rigorous six-step plan designed to help high-net-worth clients work toward financial success. To learn more about any step of the wealth management process or to speak with a reputable wealth management firm, reach out to the highly qualified professionals at Campbell Wealth Management, Inc. today.