Wealth management is a specialized investment practice that involves financial planning, asset protection, tax management, and other financial services for clients with a high net worth. A wealth management firm handles a wide range of complex financial issues to help wealthy clients grow their money, minimize expenses and save for a secure future.
The Characteristics Of A Wealth Management Firm
No two wealth management firms are exactly the same. There are different types of wealth managers that focus on varying aspects of finances, such as financial planners, money managers and investment planners. Here is a look at some characteristics of a wealth management firm and the services they offer.
Financial Planning
A financial plan is a comprehensive overview of a person’s finances and financial goals. It should also include the necessary steps to achieve these goals. Financial plans can provide clients with deeper insight as to where they stand money-wise and if they need to make adjustments to their spending to achieve certain objectives by a specified date.
Financial plans typically stretch over months, years or even decades, and are regularly reviewed and updated as financial situations change. These plans are designed to be flexible to account for possible life changes, such as a marriage, new job, birth of a child or an extended hospital stay.
Investment Management
Investment management refers to the management of financial assets and other types of investments. This involves not only the buying and selling of assets or investments but also the development of short-term and long-term strategies for acquiring and eliminating portfolio holdings. Investment management can also involve other aspects of financing, such as budgeting, banking and tax services.
An investment manager works alongside clients to help them meet their investment goals. Common investment management services include financial statement analysis, tangible and intangible asset allocation, stock selection, portfolio strategy and monitoring of existing investments.
Retirement Planning
Saving for retirement is often a lifelong process. During the retirement planning process, a client establishes their retirement income goals and makes important decisions to help ensure that these goals are met by the time they hit retirement age. Retirement planning typically involves a series of strategies for saving, investing and distributing money to build a “nest egg” that supports an aging adult later in life.
Retirement planning takes into account not only a person’s income and assets but also their future liabilities, expenses and life expectancy. A wealth management firm may suggest a variety of popular investment vehicles to help clients save, such as 401(k)s or IRAs which could potentially offer certain tax advantages.
What Do Wealth Management Firms Aim to Achieve?
The main intent of a wealth management firm is to deliver comprehensive financial advice and services designed to increase their clients’ wealth. However, the goal of a wealth management firm is generally linked to the goals of the clients. Here are some of the top objectives that wealth management firms aim to achieve.
Help Manage Annual ROI
Wealth management firms use a wide range of investment strategies to help increase a client’s wealth and potentially achieve a high annual return on investment (ROI). The strategy that a wealth manager recommends should match the investor’s financial goals and risk tolerance. Wealth management firms understand that high net worth clients have more complex needs and will take this information into account when developing a strategy. With help from a wealth management firm, clients are able to obtain larger returns which contribute to their wealth-building efforts.
Limit Client Expenses
High net worth clients often face more frequent and higher expenses than the average person. They generally pay more taxes, have higher banking fees and other costs that can greatly impact their ability to grow their money. Wealth management firms aim to limit client expenses, meaning more money is available for savings or investments. Wealth management firms use a wide range of strategies to cut costs, such as identifying low-cost investments and properly managing and diversifying a client’s portfolio.
Plan for a Suitable Retirement
The goal of investing for retirement is to accumulate adequate wealth prior to the last day of work. This results in a passive income that can be used to maintain a comfortable standard of living. Wealth management firms understand the importance of building wealth for a stable retirement and provide financial advice to help clients save towards retirement over time. This may be achieved through a standard retirement savings account or by investing money elsewhere for a gradual return on investment.
Consult With A Wealth Management Firm
Wealth management services are critical for the proper placement of a client’s money and assets. A wealth management firm provides the insight and services high net worth clients need to better manage their wealth for long-term stability and security. To learn more about what wealth management firms do or to speak with a reputable wealth management professional, contact Campbell Wealth Management, Inc.
